The Sky is the Limit

This paper estimates the impact of aviation disasters on the stock prices of airlines. It tests both the general impact of a disaster and the impact of a disaster for which the cause was either endogenous or exogenous. The results are obtained by means of a regression including dummy variables for disasters that occurred between 2000 and 2015. The major findings are that in general the stock price effect is still slightly positive in the first 3 days after the disaster and that thereafter it becomes and remains negative. Secondly, it is observed that the stock price effect of a disaster caused by an exogenous factor is positive for and that the stock price effect of a disaster caused by an endogenous factor is negative