Traders, guns, and money: The effects of mass shootings on stock prices of firearm manufacturers in the U.S

• Published in: PloS one Vol. 12; no. 5; p. e0177720
• Main Authors: Gopal, Anandasivam, Greenwood, Brad N
• Format: Journal Article
• Language: English
• Published: United States Public Library of Science 18.05.2017; Public Library of Science (PLoS)
• Subjects: Abortion; Acquisitions & mergers; Aggression; Analysis; Benchmarks; Catalysts; Child; Children; Commerce - statistics & numerical data; Competition; Constrictions; Control; Criminal investigations; Datasets; Divestments; Econometrics; Economic models; Economics; Election results; Engineering and Technology; Evidence; Firearm laws & regulations; Firearms; Firearms - economics; Firearms industry; Gun violence; Housing; Housing prices; Humans; Investment; Laws, regulations and rules; Liquidity; Management; Manufacturers; Markets; Mass murders; Medicine and Health Sciences; Mental disorders; Mental health; Money; Parents; Political science; Politics; Prices; Prices and rates; Product recalls; Quantitative analysis; Regulations; Reviews; Risk factors; Schools; Short term; Social Media; Social Sciences; State elections; Statistical analysis; Stock prices; Stocks; Suicide; Tension; Trauma; Violence; Violence - economics; Weapons industry; Workers; Massachusetts; Connecticut; United States > US
• ISSN: 1932-6203; 1932-6203
• DOI: 10.1371/journal.pone.0177720

We investigate how mass shootings influence the stock price of firearms manufacturers. While it is well known that mass shootings lead to increased firearms sales, the response from financial markets is unclear. On one hand, given the observed short-term increase in demand, firearm stock prices may rise due to the unexpected financial windfall for the firm. On the other, mass shootings may result in calls for regulation of the industry, leading to divestment of firearms stocks in spite of short-term demand. We examine this tension using a market movement event study in the wake of 93 mass shootings in the U.S. between 2009 and 2013. Findings show that stock prices of firearm manufacturers decline after shootings; each event reducing prices between 22.4 and 49.5 basis points, per day. These losses are exacerbated by the presence of a handgun and the number of victims killed, but not affected by the presence of children or location of the event. Finally, we find that these effects are most prevalent in the period 2009-2010 but disappear in later events, indicating that markets appear to have accepted mass shootings as the "new normal."