Original Research

The impact of disasters and terrorism on the stock market

Tchai Tavor, Sharon Teitler-Regev
Jàmbá: Journal of Disaster Risk Studies | Vol 11, No 1 | a534 | DOI: https://doi.org/10.4102/jamba.v11i1.534 | © 2019 Tchai Tavor, Sharon Teitler-Regev | This work is licensed under CC Attribution 4.0
Submitted: 24 August 2017 | Published: 21 January 2019

About the author(s)

Tchai Tavor, Department of Economics and Management, The Max Stern Yezreel Valley Academic College, Israel
Sharon Teitler-Regev, Department of Economics and Management, The Max Stern Yezreel Valley Academic College, Israel

Abstract

The growing number of negative events worldwide, among them natural disasters, artificial disasters and terrorism, has led the public to focus attention on the impact of such events on the economy and the capital market. This research examines the effects of natural disasters, artificial disasters and terrorism on the stock market in order to reveal profit opportunities. In this research, we collected data on 344 significant events that received media attention and examined the differences between the three types of events using the Pessimism Index. Some of the results include the following: (1) natural disasters cause the greatest damage to the economy, whereas terrorism causes the least damage; (2) natural disasters exhibit the highest level of severity, whereas artificial disasters have the lowest severity. The research reveals some opportunities for investors to obtain arbitrage profits. During natural disasters, the stock index decreases on the day of the events and on the two subsequent days. Therefore, investors should short sell the index on the day of the disaster and hold it for 2 days. On the contrary, during artificial disasters or terrorist incidents, the index drops only on the day of the event and the next day, so investors should short sell the index on the day of the disaster and hold it until the end of the first working day following the incident.

Keywords

terrorism; natural disasters; artificial disasters; capital markets

Metrics

Total abstract views: 6180
Total article views: 6611

 

Crossref Citations

1. COVID-19 Pandemic and Stock Performance: Evidence from the Sub-Saharan African Stock Markets
Mbongiseni Ncube, Mabutho Sibanda, Frank Ranganai Matenda
Economies  vol: 11  issue: 3  first page: 95  year: 2023  
doi: 10.3390/economies11030095

2. Measuring resilience is essential to understand it
Stuart L. Pimm, Ian Donohue, José M. Montoya, Michel Loreau
Nature Sustainability  vol: 2  issue: 10  first page: 895  year: 2019  
doi: 10.1038/s41893-019-0399-7

3. US and European Stock Markets in Response to Exogenous Shocks: Cross-Regional Analysis of Dynamic Networks During the COVID-19 Pandemic
Jan-Hendrik Schuenemann, Natallia Katenka, Natalia Ribberink
Global Business Review  year: 2023  
doi: 10.1177/09721509231158867

4. Development Trends of the Securities Market in Ukraine
Nataliia E. Krasnostanova
Scientific Bulletin of Mukachevo State University Series “Economics”  vol: 8  issue: 4  first page: 19  year: 2022  
doi: 10.52566/msu-econ.8(4).2021.19-26

5. Embracing technology for improving dental records and record keeping in the Republic of South Africa. A review.
NT Mahlangu, Susan Chandler, Stephen Sudi
South African Dental Journal  vol: 78  issue: 07  first page: 347  year: 2023  
doi: 10.17159/sadj.v78i07.17073

6. COVID‐19 impact on stock market: Evidence from the Indian stock market
Manamani Sahoo
Journal of Public Affairs  vol: 21  issue: 4  year: 2021  
doi: 10.1002/pa.2621

7. Assessing the safe haven properties of oil in African stock markets amid the COVID-19 pandemic: a quantile regression analysis
Emmanuel Assifuah-Nunoo, Peterson Owusu Junior, Anokye Mohammed Adam, Ahmed Bossman
Quantitative Finance and Economics  vol: 6  issue: 2  first page: 244  year: 2022  
doi: 10.3934/QFE.2022011

8. Stock Market Responses to the COVID-19 Health Crisis
Abdul Wajid, Kanishka Gupta
International Journal of Business Analytics  vol: 9  issue: 1  first page: 1  year: 2022  
doi: 10.4018/IJBAN.303114

9. Pandemic or panic? A firm-level study on the psychological and industrial impacts of COVID-19 on the Chinese stock market
Qiuyun Wang, Lu Liu
Financial Innovation  vol: 8  issue: 1  year: 2022  
doi: 10.1186/s40854-022-00335-8

10. Stock market performance and COVID-19 pandemic: evidence from a developing economy
Michael Insaidoo, Lilian Arthur, Samuel Amoako, Francis Kwaw Andoh
Journal of Chinese Economic and Foreign Trade Studies  vol: 14  issue: 1  first page: 60  year: 2021  
doi: 10.1108/JCEFTS-08-2020-0055

11. Do Investors Get an Advantage from Corporate Green Bond Issuance? A Cross-Country Study
Tabassum Riaz, Aslam Izah Selamat, Normaziah Mohd Nor, Ahmad Fahmi Sheikh Hassan
Studia Universitatis „Vasile Goldis” Arad – Economics Series  vol: 35  issue: 2  first page: 1  year: 2025  
doi: 10.2478/sues-2025-0006

12. Parsing the Performance of Stock Market Indices Amidst COVID-19 and Russia-Ukraine War: A Comparative Study of DSEX, Nifty-50, and KSE-100
Mithun Bairagi, Kaniz Fatema, Sutap Kumar Ghosh, Mst. Umme Habiba
European Journal of Business and Management Research  vol: 9  issue: 4  first page: 49  year: 2024  
doi: 10.24018/ejbmr.2024.9.4.2330

13. Analyzing the varied impact of COVID-19 on stock markets: A comparative study of low- and high-infection-rate countries
Sharon Teitler Regev, Tchai Tavor, Ricky Chee Jiun Chia
PLOS ONE  vol: 19  issue: 1  first page: e0296673  year: 2024  
doi: 10.1371/journal.pone.0296673

14. The Impact of COVID-19 on Stock Market Returns in Vietnam
Dao Van Hung, Nguyen Thi Minh Hue, Vu Thuy Duong
Journal of Risk and Financial Management  vol: 14  issue: 9  first page: 441  year: 2021  
doi: 10.3390/jrfm14090441

15. Investigating the Effects of Natural Disasters on the Stock Market on a Sectoral Basis: The Case of 2023 Kahramanmaraş/Türkiye Earthquake
Hilmi Tunahan AKKUŞ, Varol KIŞLALIOĞLU
International Journal of Business and Economic Studies  vol: 5  issue: 2  first page: 141  year: 2023  
doi: 10.54821/uiecd.1296562

16. Behavior of financial markets during the COVID-19 crisis: a comparison of Israel and the rest of the world
Sharon Teitler-Regev, Tchai Tavor
Israel Affairs  vol: 27  issue: 4  first page: 691  year: 2021  
doi: 10.1080/13537121.2021.1940604

17. Force majeure events and stock market reactions in Ukraine
Guglielmo Maria Caporale, Alex Plastun, Inna Makarenko
Investment Management and Financial Innovations  vol: 16  issue: 1  first page: 334  year: 2019  
doi: 10.21511/imfi.16(1).2019.26

18. Impact of Domestic Terrorism on Economy: A Literature Review
Robb Shawe, Ian R. McAndrew
iBusiness  vol: 15  issue: 01  first page: 84  year: 2023  
doi: 10.4236/ib.2023.151006

19. Identification of methodologies to quantify education system resilience—A scoping review
Johannes Dülks, Alexander Fekete, Harald Karutz, Johanne Kaufmann, Corinna Posingies
International Journal of Disaster Risk Reduction  vol: 97  first page: 103967  year: 2023  
doi: 10.1016/j.ijdrr.2023.103967

20. Group-specific behavior change following terror attacks
Jonas L. Juul, Laura Alessandretti, Jesper Dammeyer, Ingo Zettler, Sune Lehmann, Joachim Mathiesen
Journal of Computational Social Science  vol: 6  issue: 1  first page: 1  year: 2023  
doi: 10.1007/s42001-022-00188-2

21. Kitekintés a terrorizmus definiálásának problémájára a tudományos kutatásokban
Richárd Tamás Pék
Belügyi Szemle  vol: 70  issue: 12  first page: 2611  year: 2022  
doi: 10.38146/BSZ.2022.12.4

22. COVID-19 catastrophes and stock market liquidity: evidence from technology industry of four biggest ASEAN capital market
Sherin Priscilla, Saarce Elsye Hatane, Josua Tarigan
Asia-Pacific Journal of Business Administration  vol: 15  issue: 5  first page: 695  year: 2023  
doi: 10.1108/APJBA-10-2021-0504

23. One Step Ahead: A Framework for Detecting Unexpected Incidents and Predicting the Stock Markets
Ziyue Li, Shiwei Lyu, Haipeng Zhang, Tianpei Jiang
IEEE Access  vol: 9  first page: 30292  year: 2021  
doi: 10.1109/ACCESS.2021.3059283

24. Force Majeure Events And Stock Market Reactions In Ukraine
Guglielmo Maria Caporale, Oleksiy Plastun, Inna Makarenko
SSRN Electronic Journal   year: 2019  
doi: 10.2139/ssrn.3362155

25. Corporate response to catastrophic events: an analysis of executive compensation strategies following Hurricane Katrina disasters
Richard Yeboah, Lutfa Tilat Ferdous, Ali Meftah Gerged, Zhentao Liu
Journal of Accounting Literature  year: 2025  
doi: 10.1108/JAL-05-2024-0092

26. Environmental health performance and the nexus between terrorism and the economics of technological innovation
Chukwuemeka Valentine Okolo, Andres Susaeta, Anthony Orji, Jonathan E. Ogbuabor
Journal of Environmental Studies and Sciences  vol: 15  issue: 4  first page: 876  year: 2025  
doi: 10.1007/s13412-024-00992-4