Do Industrial Incidents in the Chemical Sector Create Equity Market Contagion?
9 Pages Posted: 10 Jun 2014
Date Written: June 9, 2014
Abstract
This paper examines the impact of chemical industry incidents on the stock prices of the accident company and their direct competitors. Results show that the incident company experiences deeper negative abnormal returns as the number of injuries and fatalities as a result of the incident increases. The stock value of the competitor companies also suffer substantial losses stemming from contagion effects when disasters occur causing ten or more injuries or fatalities, but benefit from the incident though increasing stock value when the levels of injury and fatality is minor.
Keywords: Chemical incidents, Stock markets, Contagion effects, Risk management, Event study.
JEL Classification: G14, G15, G32.
Suggested Citation: Suggested Citation