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How Does the Stock Market Respond to Chemical Disasters?

  • Marie-Aude Laguna

    ()

    (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine)

  • Gunther Capelle-Blancard

    ()

    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

In this paper, we examine the stock market reaction to industrial disasters. We consider an original sample of 64 explosions in chemical plants and refineries worldwide over the period 1990-2005. A quarter of the accidents resulted in a toxic release, and half of them caused at least one death or serious injury. On average, petrochemical firms in our sample experience a drop in their market value of 1.3% over the two days immediately following the disaster. Using multivariate analysis, we show that this loss is significantly related to the seriousness of the accident as measured by the number of casualties and by chemical pollution: each casualty corresponds to a loss of $164 million and a toxic release to a loss of $1 billion.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00637961.

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Date of creation: Mar 2010
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Publication status: Published, Journal of Environmental Economics and Management, 2010, 59, 2, 192-205
Handle: RePEc:hal:cesptp:halshs-00637961
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00637961
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