It is odd to see an academic peer-reviewed paper in which the actual substance of the paper seems to diverge so completely from what the authors say are their conclusions. This is the case, though, in a new paper by Cecile Carpentier and Jean-Marie Suret, dealing with the question: do stock price declines create a plausible deterrent for industrial accidents? Here's the link: JofEEM. Here's the abstract: We analyze the stock market reaction to 161 major environmental and non-environmental accidents, reported on the front page of the New York Times for half a century. To determine if the market induces a real deterrence effect, we extend the event windows up to one year. On average, the market reacts negatively and enduringly to the announcement of an accident. However, this average effect is largely driven by the airline industry and by government interventions. The estimated average compounded abnormal return following environmental accidents does not differ from ze...
