School of Economics, Finance and Marketing, Royal Melbourne Institute of Technology, Australia. I should like to acknowledge the help and advice of Richard Heaney and Sinclair Davidson in completing this research project. I also thank the participants of the PhD conference in Economics and Business held in Perth in 2005.
THE IMPACT OF TERRORISM ON UNITED STATES INDUSTRIES
Article first published online: 13 APR 2010
2008 The Economic Society of Australia
Economic Papers: A journal of applied economics and policy
Volume 27, Issue 2, pages 115–134, June 2008
How to Cite
CAM, M.-A. (2008), THE IMPACT OF TERRORISM ON UNITED STATES INDUSTRIES. Economic Papers: A journal of applied economics and policy, 27: 115–134. doi: 10.1111/j.1759-3441.2008.tb01031.x
- Issue published online: 13 APR 2010
- Article first published online: 13 APR 2010
- Stock market;
- Political risk;
This research tests United States industry equity indices returns in order to determine if terrorism has some industry-specific effect. I use the event-study approach applied to 135 industrial equity return series in assessing industry level reaction to 11 September, the Bali bombing and the Madrid bombing. The event study method used in this paper is adjusted for GARCH effects. The results show that industries react unevenly to terrorism. Following 11 September, airline, hotel and leisure industries exhibit negative abnormal returns while water, defence and telecom experienced positive returns. There was little impact on the US industry equity returns with the Bali and the Madrid attacks, suggesting that US industries were only moderately sensitive to these attacks.