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Terrorist attacks and energy firms' crash risk in stock markets: Evidence from China

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  • Kong, Dongmin
  • Xiong, Mengxu
  • Xiang, Junyi

Abstract

This paper investigates the effects of terrorism on energy firms' stock price crash risk in Chinese listed firms. When terrorist attacks occurred in a certain range near the firm, the crash risk increased significantly by approximately 17.5% on average. A plausible mechanism is that energy firms are likely to conduct aggressive investment in terms of the negative effect of the attacks. Local governments may press local firms to invest more to support the local economy, and local financing costs may fall, giving local firms a good opportunity to invest when the economy performs poorly.

Suggested Citation

  • Kong, Dongmin & Xiong, Mengxu & Xiang, Junyi, 2021. "Terrorist attacks and energy firms' crash risk in stock markets: Evidence from China," Energy Economics, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:eneeco:v:102:y:2021:i:c:s0140988321003601
    DOI: 10.1016/j.eneco.2021.105474
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    Cited by:

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    2. Kong, Xiaowei & Jin, Yifan & Liu, Lihua & Xu, Jialu, 2023. "Firms' exposures on COVID-19 and stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 52(C).
    3. Irshad Hira & Taib Hasniza Mohd & Hussain Haroon & Hussain Rana Yassir, 2023. "Conventional and Islamic Equity Market Reaction Towards Terrorism: Evidence Based on Target Types, Location and Islamic Calendar Months," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 33(4), pages 70-116, December.
    4. Richardson, Grant & Obaydin, Ivan & Liu, Chelsea, 2022. "The effect of accounting fraud on future stock price crash risk," Economic Modelling, Elsevier, vol. 117(C).
    5. Mahdi Salehi & Grzegorz Zimon & Hayder Adnan Hashim & Ryszard Jędrzejczak & Adam Sadowski, 2022. "Accounting Quality and Audit Attributes on the Stock Price Crashes in an Emerging Market," Risks, MDPI, vol. 10(10), pages 1-24, October.
    6. Lee, Chien-Chiang & Wang, Chih-Wei & Thinh, Bui Tien & Purnama, Muhammad Yusuf Indra, 2023. "Cash holdings and cash flows: Do oil price uncertainty and geopolitical risk matter?," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 134-152.
    7. Tang, Qi, 2023. "Labor cost and stock price crash risk: Evidence from China," Finance Research Letters, Elsevier, vol. 55(PB).

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