The communicative impact of terrorist attacks on the financial marketplace: a perspective from the efficient market hypothesis
This study measures patterns following a terrorist attack, from the perspective of market efficiency, to determine the communicative impact of terrorist attacks on the financial marketplace. The Efficient Market Hypothesis postulates that asset prices fully reflect all available information. An impo...
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| Contributors: | ; |
| Format: | Electronic Article |
| Language: | English |
| Published: |
2021
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| In: |
Crime, law and social change
Year: 2021, Volume: 76, Issue: 4, Pages: 337-366 |
| Online Access: |
Volltext (lizenzpflichtig) |
| Journals Online & Print: | Drawer...
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| Check availability: | HBZ Gateway |
| Keywords: |
| Summary: | This study measures patterns following a terrorist attack, from the perspective of market efficiency, to determine the communicative impact of terrorist attacks on the financial marketplace. The Efficient Market Hypothesis postulates that asset prices fully reflect all available information. An important implication is that, because market price changes are determined by new information (or variations in discount rates), it would be highly difficult to "beat the market" with expert stock selection or market timing. Overall, we found that, based on mixed results, terrorist attacks do not lead to a distinguishable pattern in the financial marketplace. Nevertheless, drawing on the Yale Model of Persuasion, these results suggest that terrorists are effective in their communicative goals, and they do lead to a compelling pattern in the proportion of negative returns on the day of the attack. More precisely, terrorists are able to communicate their message on a global scale, thereby resulting in investors adjusting their estimates of value downward. While a possible price correction pattern was found, the lack of statistical analysis performed on the variables, to a certain degree of significance, is a limitation of this study that ultimately renders the results of the study inconclusive. |
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| Item Description: | Literaturverzeichnis: Seite 365-366 |
| ISSN: | 1573-0751 |
| DOI: | 10.1007/s10611-021-09969-8 |