Traders, Guns, and Money: The Effects of Mass Shootings on Stock Prices of Firearm Manufacturers in the U.S.

Abstract

We investigate how mass shootings influence the stock price of firearms manufacturers. While it is well known that mass shootings lead to increased firearms sales, the response from financial markets is unclear. On one hand, given the observed short-term increase in demand, firearm stock prices may rise due to the unexpected financial windfall for the firm. On the other, mass shootings may result in calls for regulation of the industry, leading to divestment of firearms stocks in spite of short-term demand. We examine this tension using a market movement event study in the wake of 93 mass shootings in the U.S. between 2009 and 2013. Findings show that stock prices of firearm manufacturers decline after shootings; each event reducing prices between 22.4 and 49.5 basis points, per day. These losses are exacerbated by the presence of a handgun and the number of victims killed, but not affected by the presence of children or location of the event. Finally, we find that these effects are most prevalent in the period 2009-2010 but disappear in later events, indicating that markets appear to have accepted mass shootings as the "new normal."

Sentimental Business Cycles

“…Although there is some evidence that mass shootings affect stock returns of firearms manufacturers (see e.g. Gopal and Greenwood, 2017), when we look at the S&P500 we do not find any significant reaction of stock market prices to mass shootings. If we use mass shootings as an instrument for movements in stock market prices the F-statistics indicate that mass shootings do not affect the stock market prices significantly, alleviating possible concerns also about the exclusion restriction.…”

JULY — In(ter)dependence Day: Lives mattering, freedom with responsibility, and social well‐being

“…This constitutional right to bear arms is the subject of much debate in the US, especially following mass shootings and considering the fact that 31% of such shootings in the world occur in the US (Lankford, ). While it is also the case that, following a mass shooting in the US, gun sales tend to increase (Gopal & Greenwood, ), there does appear to be an increasing questioning of the centrality and sanctity of this right, and an advocacy of increased gun control. Most recently and notably, following the shooting at Stoneman Douglas High School in Parkland, Florida on 14 th February this year (2018) in which 17 students and staff were killed, this has found expression in the foundation of the #NeverAgain and #EnoughisEnough movements.…”

Detecting a Copycat Effect in School Shootings Using Spatio-Temporal Panel Count Models

“…Deangelis et al (2011) estimate the cost of additional school security. Gopal and Greenwood (2017) study the effects of mass shootings on stock prices of firearm manufacturers. Brodeur and Yousaf (2019) observe a significant negative effect of mass shootings on local employment, earnings, house prices, and consumer confidence, which is found to be exacerbated by extensive media coverage.…”