Risk Perceptions on Hurricanes: Evidence from the U.S. Stock Market

José Manuel Feria-Domínguez, Pilar Paneque and María Gil-Hurtado
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José Manuel Feria-Domínguez: Department of Financial Economics, Pablo de Olavide University, 41013 Seville, Spain
Pilar Paneque: Department of Geography, Pablo de Olavide University, 41013 Seville, Spain
María Gil-Hurtado: EY Climate Change and Sustainability Assurance, 41013 Seville, Spain

IJERPH, 2017, vol. 14, issue 6, 1-18

Abstract: This article examines the market reaction of the main Property and Casualty (P & C) insurance companies listed in the New York Stock Exchange (NYSE) to seven most recent hurricanes that hit the East Coast of the United States from 2005 to 2012. For this purpose, we run a standard short horizon event study in order to test the existence of abnormal returns around the landfalls. P & C companies are one of the most affected sectors by such events because of the huge losses to rebuild, help and compensate the inhabitants of the affected areas. From the financial investors’ perception, this kind of events implies severe losses, which could influence the expected returns. Our research highlights the existence of significant cumulative abnormal returns around the landfall event window in most of the hurricanes analyzed, except for the Katrina and Sandy Hurricanes.

Keywords: natural hazards; hurricanes; risk perceptions; financial markets; event study (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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