Abstract
This article examines the effects of fifteen major terror attacks perpetrated in the U.S. and Europe between 2001 and 2017 on a general global stock market index as well as on industry-specific indices, namely (1) airlines, (2) global hotels, restaurants, and leisure (hospitality), and (3) global utilities. Using an event-study method, we show that attacks tend to result in significant negative abnormal returns on the day of attack which, on occasion, persist for a few days. As expected, adverse market effects appear more pronounced, in terms of magnitude and persistence, for the global airline and hospitality industries than for the global utilities industry. Attacks in Europe since 2015 show no adverse global market effects, with two late exceptions (the London Bridge and Barcelona attacks, both in 2017). This might suggest that just when investors and markets seemed to have learned to cope with attacks, these two latter events caused some concern again. Implications of our findings for short- and long-term global investor strategy are discussed.
Highlights
Economic costs of acts of terror can be grouped into three categories (Krugman, 2004)
Employing an event-study method, we assess whether fifteen major terror attacks that took place between 2001 and 2017 in the United States and Western Europe carried adverse effects on global stock markets
The reason for our selection is that the research questions we address focus on possible effects at the international capital markets level where there is clearly a high level of integration between the European and U.S markets
Summary
Economic costs of acts of terror can be grouped into three categories (Krugman, 2004). Employing an event-study method, we assess whether fifteen major terror attacks that took place between 2001 and 2017 in the United States and Western Europe carried adverse effects on global stock markets.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
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 callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
