Do markets love misery? : Stock prices and corporate philanthropic disaster response

While companies have emerged as very proactive donors in the wake of recent major disasters like Hurricane Katrina, it remains unclear whether that corporate generosity generates benefits to firms themselves. The literature on strategic philanthropy suggests that such philanthropic behavior may be valuable because it can generate direct and indirect benefits to the firm, yet it is not known whether investors interpret donations in this way. We develop hypotheses linking the strategic character of donations to positive abnormal returns. Using event study methodology, we investigate stock market reactions to corporate donation announcements by 108 US firms made in response to Hurricane Katrina. We then use regression analysis to examine if our hypothesized predictors are associated with positive abnormal returns. Our results show that overall, corporate donations were linked to neither positive nor negative abnormal returns. We do, however, see that a number of factors moderate the relationship between donation announcements and abnormal stock returns. Implications for theory and practice are discussed

Measuring the impact of natural disasters on capital markets: An empirical application using intervention analysis

This paper examines the impact of natural disasters on the Australian equity market. The data set employed consists of daily price and accumulation returns over the period 31 December 1982 to 1 January 2002 for the All Ordinaries Index (AOI) and a record of forty-two severe storms, floods, cyclones, earthquakes and bushfires (wildfires) during this period with an insured loss in excess of AUD5 mil. and/or total loss in excess of AUD100 mil. Autoregressive moving average (ARMA) models are used to model the returns and the inclusion of news arrival in the form of the natural disasters is specified using intervention analysis. The results indicate bushfires, cyclones and earthquakes have a major effect on market returns, unlike severe storms and floods. The net effects can be positive and/or negative with most effects being felt on the day of the event and with some adjustment in the days that follow.Natural events, disasters and catastrophes, market returns, intervention analysis, ARMA

The demand for homeowners insurance with bundled catastrophe coverages : Wharton project on managing catastrophic risks

In this paper, we estimate the demand for homeowner insurance in Florida. Since we are interested in a number of factors influencing demand, we approach the problem from two directions. We first estimate two hedonic equations representing the premium per contract and the price mark-up. We analyze how the contracts are bundled and how contract provisions, insurer characteristics and insured risk characteristics and demographics influence the premium per contract and the price mark-up. Second, we estimate the demand for homeowners insurance using two-stage least squares regression. We employ ISO's indicated loss costs as our proxy for real insurance services demanded. We assume that the demand for coverage is essentially a joint demand and thus we can estimate the demand for catastrophe coverage separately from the demand for noncatastrophe coverage. We determine that price elasticities are less elastic for catastrophic coverage than for non-catastrophic coverage. Further estimated income elasticities suggest that homeowners insurance is an inferior good. Finally, we conclude based on the results of a selection model that our sample of ISO reporting companies well represents the demand for insurance in the Florida market as a whole

Globalization and Health: Impact Pathways and Recent Evidence

The last two decades of the twentieth century recorded a slowdown in health gains and widespread increases in health inequality across and within countries. The paper explores the causes of such trends on the basis of five main mortality models. To do so, it regresses IMR/LEB on 15 determinants of health. The results underscore the negative health effects of the trends observed between 1980-2000, such as rising inequality, greater income volatility, declining health expenditure, increasing migration and so on. Finally, the paper simulates the level of LEB that would have been achieved in ten regions of the world if the determinants of health had continued developing over these decades as they did over 1960-80. The results indicate that in seven of such regions (including China and India) LEB would have been higher than actually observed. In this regard, the paper raises doubts about the way globalization has taken place and the way public policy oriented it.health status, health inequalities, globalization

The impact of lockdown announcements during the COVID-19 crisis: An event study from the Portuguese stock market

The COVID-19 pandemic impacted global financial markets in an unprecedented manner. It is well-documented the negative effect in stock markets and increased volatility caused by the preventive measures adopted to combat the disease. This study aims to analyse how lockdowns and other restrictive measures affected the Portuguese index PSI-20 and its constituents. Specially, it investigates the effect over the three first waves of COVID-19 in Portugal, using the STOXX600 European index as benchmark, between March 2020 and April 2021. To test the hypothesis of whether lockdown measures affected stock returns, an event study methodology is employed to detect the presence of abnormal returns around each event date. Using a set of 21 events and a 5-day event window for each event, the abnormal returns are analysed with parametric and nonparametric tests. The test results show a negative market response over strict lockdown announcements, and a positive response over the withdrawals of such restrictions. The results suggest investors are likely to respond negatively to government’s impositions, especially in extraordinary situations. Nevertheless, the impact declines as the period of impositions extends. In addition, the companies most affected by the Portuguese government impositions are Ibersol and EDP Renováveis, while the least affected companies are Jerónimo Martins and Pharol.A pandemia da COVID-19 teve um impacto sem precedentes nos mercados financeiros mundiais. Está bem documentado o efeito negativo nos mercados bolsistas e o aumento da volatilidade causada pelas medidas preventivas adotadas para combater a transmissão da doença. Este estudo visa analisar como os confinamentos e outras medidas preventivas afetaram o índice bolsista Português PSI-20, assim como os seus constituintes. Em especial, investiga o efeito nas três primeiras vagas da COVID-19 em Portugal, utilizando o índice Europeu STOXX600 como referência, entre Março de 2020 e Abril de 2021. Para testar a hipótese se as medidas de prevenção afetaram os retornos das ações, é utilizada uma metodologia de estudo de eventos para detetar a presença de retornos anormais durante cada evento. Utilizando um conjunto de 21 eventos e um período de 5 dias para cada evento, os retornos anormais são analisados com testes paramétricos e não paramétricos. Os resultados dos testes mostram uma resposta negativa do mercado em relação a anúncios de confinamento, e uma resposta positiva em relação à retirada de tais restrições. Os resultados sugerem que os investidores são suscetíveis de responder negativamente às restrições do governo, especialmente em situações extraordinárias. No entanto, o impacto decresce à medida que o período de restrições se estende. Adicionalmente, as empresas mais afetadas pelas imposições do governo Português são a Ibersol e a EDP Renováveis, enquanto as empresas menos afetadas são a Jerónimo Martins e a Pharol

The historical evolution of accounting in China (novissima sinica): effects of culture (2nd part).

Este artículo intenta explicar los criterios que sustentan la idea de que la contabilidad China ha sido conformada durante el pasado siglo con arreglo a factores culturales, económicos y políticos. Asimismo se propone estudiar los fenómenos históricos experimentados por la contabilidad china en el transcurso de los años, y evaluar comparativa y críticamente los efectos culturales de los mismos con las transformaciones políticas y económicas que han tenido influencia en el desarrollo de la contabilidad China. This paper attempts to argue the criteria which claim that Chinese accounting has been shaped by together with cultural, economical and political factors in the last century. This paper also aims to compare historical phenomena which occurred in Chinese accounting over the years, and then to assess comparatively or critically the effects of culture with politic and the economic transformations on the development of Chinese accounting.Contabilidad comparativa, contabilidad china, factores culturales, historia, sociología. Chinese accounting, comparative accounting, cultural factors, evolution, history, sociology.

Does mood affect trading behavior?

We test whether investor mood affects trading with data on all stock market transactions in Finland, utilizing variation in daylight and local weather. We find some evidence that environmental mood variables (local weather, length of day, daylight saving and lunar phase) affect investors’ direction of trade and volume. The effect magnitudes are roughly comparable to those of classical seasonals, such as the Monday effect. The statistical significance of the mood variables is weak in many cases, however. Only very little of the day-to-day variation in trading is collectively explained by all mood variables and calendar effects, but lower frequency variation seems connected to holiday seasons