There’s a Guy in the Center Aisle with a Gun!” -Workplace Homicides and Shareholder Wealth

This paper examines equity market responses to workplace homicides. Although previous research has examined the demographic, behavioral, and loss control aspects of workplace violence, as well as stock price reactions to large, non-operating losses, this is the first study to jointly consider these two important research avenues. Although insignificant on the event day for the sample as a whole, significant negative abnormal returns were detected over the 30 days following workplace killings. A cross-sectional regression of the company-specific cumulative abnormal return levels registered over the event period suggests that the employment status of the killer was the key explanatory variable. Accordingly, the initial sample was divided between events in which the perpetrator was either a current or former employee of the firm versus events in which the killer was unrelated to the targeted company. Stark differences in market reactions to the two samples were found. In particular, employment- related killings produced a negative announcement effect and significant negative returns that persisted for some time after the killings. Overall, the results demonstrate the importance of loss control and market perception of culpability (e.g., forthcoming lawsuits and settlements) when a current or former employee commits a workplace homicide.