Abstract
The study investigats the impact of terrorism activities on five economies (Developing and Developed) financial stock markets. Spain, United Kingdom, India, Pakistan, America and France were chosen for the analysis. The variables considered were terrorist activities and market return of the financial stock markets. Daily time series data for the period from 1st Jan 2001 to 31st Dec 2018 was analyzed by applying simple linear regression model to estimate the effects of terrorist activities on financial stock market returns of the selected countries. The results suggest that the market return is affected by the terror events and the model is overall statistically significant. The results of this study are consistent with findings of Freytag et al. (2009) and Basuchoudhary and Shughart (2010). Significant influence of terrorist activities on financial market returns offer financial markets stakeholders not only an understanding of the direction of market swing following terror factors on stock market but also offers guidance towards investment decision making and timing. Study further discussed how terrorism activities influence the overall market return.
Highlights
The change in economic circumstances will affect the stock prices that will have a direct reflection on the discounted value of existing and future performance of the firm
The study investigats the impact of terrorism activities on five economies (Developing and Developed) financial stock markets
As the P value against the independent variable is 2.36% meaning that less than 5%. It shows that terror activity is negative and significant influence on dependent variable that is market return
Summary
The change in economic circumstances will affect the stock prices that will have a direct reflection on the discounted value of existing and future performance of the firm. The benefit of the event study method lies in its inherent ability to make out such untoward changes as its basis lies in the overall assessment of investors who have at their hands such means as to be able to assess individual firm market value. The term terrorism has been defined by different researchers but Sandler and Enders (2008) describe terrorism as the “Premeditated, threatened or actual use of force or violence to achieve a political goal through fear, coercion or intimidation” This definition brings within its fold the four features of terrorist activity as given by Shughart (2006) firstly using violence for political purpose, secondly a well-devised way for an action; thirdly such behavior which is not within the accepted rules of warfare and fourthly an effort to produce great fear and sense of insecurity among the people, the civilians
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
