Stock Market Response to Firms’ Misconduct
No 2022-40, Working Papers ECARES from ULB -- Universite Libre de Bruxelles
Labor rights violations and environmental challenges have caused companies to comeunder increasing society’s pressure to achieve higher sustainability standards. Using a noveldataset of worldwide industrial disasters and companies allegedly involved in them, I examinewhether large companies suffer systematic stock market losses after disasters. I estimate anaverage drop in price returns of 1.47 percentage points on the day after the disaster and3.21 over one week. Accordingly, volatility soars. I then discuss the possible mechanismsbehind this negative market response. I focus on harm to the reputation for sustainabilityand I examine the media’s attention to environmental and labor topics through a sentimentanalysis of disaster-related news. I find that a more negative tone of the news is associatedwith larger stock market losses.
Keywords: Industrial Disasters; Reputation; Stock Market Returns (search for similar items in EconPapers)
JEL-codes: F23 F63 G14 Q53 (search for similar items in EconPapers)
Pages: 62 p.
New Economics Papers: this item is included in nep-env and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/3525 ... ARRA-stockmarket.pdf Œuvre complète ou partie de l'œuvre (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eca:wpaper:2013/352568
Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/352568
Access Statistics for this paper
More papers in Working Papers ECARES from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().