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Event study analysis to establish capitalization effects for publicly traded corporations reporting fatal injury events related to chemicals.

Keane P; Biddle E
NOIRS 2008-Abstracts of the National Occupational Injury Research Symposium, October 21-23, 2008, Pittsburgh, Pennsylvania. Morgantown, WV: National Institute for Occupational Safety and Health, 2008 Oct; :A4.4
Introduction: Companies using chemicals in the course of business operations are required to submit a hazard control plan to the U.S. Environmental Protection Agency. This plan reports information on injury experience, including fatal injury experience. The surveillance system RMP*Info was queried to determine all publicly traded corporations for which daily changes in stock price were also reported. The purpose of this study was to determine the effect of fatalities on capitalization effects (change in stock prices). Methods: All publicly traded corporations that reported fatal injuries to the RMP*Info database and that were also included in a standard database of stock price formed the study population (n = 27). Event study analysis, a standard method for determining capitalization effects, using Eventus was conducted on this population to determine abnormal returns on the days immediately following the event. Cross-sectional and time-series measures of dependency were adjusted to determine returns in excess of expected price. Results: Negative abnormal returns (stock prices decreased) to a group of corporations reporting fatal injury events were found for the first 2 days following the event; were marginal on days 3 and 4; and greater (stock prices increased) than expected on day 5. However, the results were not significant, with p values consistently > .10. Given the heterogeneity of the variables (degree of capitalization, analyst coverage, corporation size, property damage, number of employees involved in each incident), this was expected and largely a function of the characteristics of the reporting system and the study population. Conclusions: Abnormal returns to the study group were associated with a low probability of causal relationship with the public disclosure of events. Future studies should be designed to control or match variables by event characteristics. This effort represents the first study to analyze the effects of fatal occupational injury events from chemical hazards on stock prices.
Accident-analysis; Accident-rates; Accidents; Accident-statistics; Epidemiology; Injuries; Mortality-data; Mortality-rates; Occupational-accidents; Statistical-analysis; Surveillance-programs; Traumatic-injuries; Workplace-monitoring; Workplace-studies
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NOIRS 2008-Abstracts of the National Occupational Injury Research Symposium, October 21-23, 2008, Pittsburgh, Pennsylvania
Page last reviewed: September 2, 2020
Content source: National Institute for Occupational Safety and Health Education and Information Division