How stock market reacts to environmental disasters and judicial decisions: A case study of Mariana’s dam collapse in Brazil

T.P. Assis, F.F. Cordeiro and L.C. Schiavon

International Review of Law and Economics, 2023, vol. 73, issue C

Abstract: This study examines the stock market reaction to one of the major environmental disasters of the world mining industry: the Mariana dam collapse in Brazil. Based on an event study, we evaluated the impact on the mining companies’ abnormal returns surrounding the disaster and also investigated whether post-event judicial decisions affected the companies. Our results show a significant negative effect around the days of the event, reporting a 5 % drop in daily returns. Regarding the legal efforts, our findings suggest the coordination time and the benefits granted by authorities as being interpreted positively, reducing market’s expectation of an agile or severe punishment following Mariana’s dam disaster.

Keywords: Environmental disaster; Brazilian justice system; News; Fama-French three factor; Model; Mining industry (search for similar items in EconPapers)
JEL-codes: D84 G14 K41 Q53 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:73:y:2023:i:c:s0144818822000618

DOI: 10.1016/j.irle.2022.106105

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