The impact of terror attacks on global sectoral capital markets: An empirical study

Stelios Markoulis and Nikolas Neofytou ()
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Nikolas Neofytou: Civil Aviation Authority, Cyprus

Economics of Peace and Security Journal, 2019, vol. 14, issue 1, 46-59

Abstract: This article examines the effects of fifteen major terror attacks perpetrated in the U.S. and Europe between 2001 and 2017 on a general global stock market index as well as on industry-specific indices, namely (1) airlines, (2) global hotels, restaurants, and leisure (hospitality), and (3) global utilities. Using an event-study method, we show that attacks tend to result in significant negative abnormal returns on the day of attack which, on occasion, persist for a few days. As expected, adverse market effects appear more pronounced, in terms of magnitude and persistence, for the global airline and hospitality industries than for the global utilities industry. Attacks in Europe since 2015 show no adverse global market effects, with two late exceptions (the London Bridge and Barcelona attacks, both in 2017). This might suggest that just when investors and markets seemed to have learned to cope with attacks, these two latter events caused some concern again. Implications of our findings for short- and long-term global investor strategy are discussed.

Keywords: Event-study methodology; terror attacks; stock market reaction (search for similar items in EconPapers)
JEL-codes: D74 G14 G15 G18 L83 L93 L97 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:epc:journl:v:14:y:2019:i:1:p:46-59

DOI: 10.15355/epsj.14.1.46

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