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Stock Market Reaction To Nuclear Reactor Failures

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  • GEOFFREY S. ROTHWELL

Abstract

Current proposals to reform regulation of the commercial nuclear power industry ignore the potential of financial market sanctions on poor reactor management. This paper examines investor reaction to the automatic shutdowns following equipment failures at nuclear power plants from 1978 to 1985. Compared with a portfolio of nuclear utilities, the daily return to common equity of the owner of a failed reactor dropped by 0.24 percent after two trading days but increased by 0.24 percent four trading days later. Investors are averse to reactor failures but correct initial negative responses once they learn that the reactor is not damaged.

Suggested Citation

  • Geoffrey S. Rothwell, 1989. "Stock Market Reaction To Nuclear Reactor Failures," Contemporary Economic Policy, Western Economic Association International, vol. 7(3), pages 96-106, July.
    • Handle: RePEc:bla:coecpo:v:7:y:1989:i:3:p:96-106
    DOI: 10.1111/j.1465-7287.1989.tb00571.x
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    References listed on IDEAS

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    Cited by:

    1. Stephen Farber, 1991. "Nuclear Power, Systematic Risk, And The Cost Of Capital," Contemporary Economic Policy, Western Economic Association International, vol. 9(1), pages 73-82, January.
    2. Fink, Jason D. & Fink, Kristin E., 2013. "Hurricane forecast revisions and petroleum refiner equity returns," Energy Economics, Elsevier, vol. 38(C), pages 1-11.

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