Stock Market Response to Potash Mine Disasters

Abstract

We examine the stock market reaction to natural and man-made disasters in potash mines. We use a sample of 44 mining accidents worldwide over the period 1995-2016. A quarter of the accidents were the result of a natural disaster, such as flooding, that often ended in the closure of the potash mine. The remaining accidents were caused mainly by human error, and almost 50% were work accidents often associated with serious injury or death. On average, mining firms experience a drop in their market value of 0.89% on the day of a disaster. However, we observe a significantly stronger response of the stock market to natural events. Indeed, the regression analysis confirms that the firm's market loss is significantly related to the seriousness of the accident. On the other hand, we do not find any other micro-or macro-level factors that determine the stock market reaction following a disaster.

The impact of Coronavirus (COVID-19) outbreak on faith-based investments: An original analysis

“…One further key argument that has recently been given much attention is related to different sources of financial volatility and major events that have affected stock market returns ( Zhu et al, 2019 , Corbet et al, 2020 , Zaremba et al, 2020 , Albulescu, 2020 , Onali, 2020 , Choudhry et al, 2016 , Demirer et al, 2019 , Wang et al, 2018 , Antonakakis and Darby, 2013 ). These sources of financial volatility are market uncertainty due to disasters ( Kowalewski and Śpiewanowski, 2020 , Liu et al, 2019 ; Papadamou et al, 2020 ), economic conditions and political events ( Bash and Alsaifi, 2019 ), institutional issues and social Media news ( Bollerslev et al, 2018 , Reboredo and Ugolini, 2018 ), environmental issues ( Alsaifi et al, 2020 ), information demand and investor attention ( Chronopoulos et al, 2018 , Nikkinen and Peltomäki, 2020 ), and pandemic diseases ( Chen et al, 2009 , Ichev and Marinč, 2018 ). In this strand, Albulescu (2020) examined the impact of official announcements regarding new cases of infection and death ratios on the financial market volatility index (VIX); and finds that the death ratio positively influences VIX.…”

“…In the same vein, Chen and Chiang (2020) find evidence that a rise in economic policy uncertainty (EPU) leads to a decline in stock returns in the Chinese market. In the same line, Kowalewski and Śpiewanowski (2020) examined the stock market reaction to disasters; and find that the affected mining firms experience a cumulative drop in their market value of 1.15% in the first two days of a disaster.…”

Death and contagious infectious diseases: Impact of the COVID-19 virus on stock market returns

“…Stock market returns respond to major events. Previous studies have identified several major events that have affected such returns, for example, disasters (Kowalewski & Śpiewanowski, 2020), sports (Buhagiar et al, 2018), news (Li, 2018), and environmental (Guo et al, 2020) and political events (Bash & Alsaifi, 2019;Shanaev & Ghimire, 2019). Stock market returns may also respond to epidemic diseases, for example, Severe Acute Respiratory Syndrome (SARS) outbreak (Chen et al, 2007;Chen et al, 2009), and Ebola Virus Disease (EVD) outbreak (Ichev & Marinč, 2018).…”

The impact of COVID ‐19 on Karachi stock exchange: Quantile‐on‐quantile approach using secondary and predicted data

“…However, as this virus becomes global pandemic, it starts effecting the businesses which is reflecting in world stock markets. Some studies have examined the impact of COVID‐19 on developed stock return (Al‐Awadhi, Al‐Saifi, Al‐Awadhi, & Alhamadi, 2020; Kowalewski & Śpiewanowski, 2020), which reported that the Hang Seng index and Shanghai stock exchange, United States and European stock markets reflect negative returns. In March, United States market hit by circuit brake mechanism, four times in 10 days.…”

“…Previously, the studies are conducted in the developed economies to analyze the relationship between pandemic and stock exchanges (Al‐Awadhi et al, 2020; Kowalewski & Śpiewanowski, 2020). On contrary, we examine the impact of COVID‐19 on developing economy.…”