Risk Perceptions on Hurricanes: Evidence from the U.S. Stock Market

Feria-Domínguez, José Manuel; Paneque, Pilar; Gil-Hurtado, María

doi:10.3390/ijerph14060600

Cited by 10 publications

(9 citation statements)

References 22 publications

(32 reference statements)

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“…First, we add to the growing literature on the role that public health threats play in market reactions. Prior studies contend that the firms in heavy-polluting industries have a negative market reaction to the passage of the Environmental Protection Tax Law [ 39 ]; negative cumulative abnormal returns occur during short windows around pollution events [ 38 ]; and insurance firms have higher abnormal returns around the event window in most of the hurricane hazards [ 37 ]. These findings suggest that the increase in public health risks affects the markets.…”

Section: Conclusion and Discussionmentioning

confidence: 99%

“…Third, several studies show that event risks (e.g., pollution events, hurricane disasters) will have a negative effect on firm valuation [ 37 , 38 , 39 ]. Moreover, Liu et al [ 40 ] emphasize that significant events lead to abrupt changes in stock prices and volatility, and investors are more likely to hold less risky assets.…”

Section: Background Literature and Hypothesis Developmentmentioning

confidence: 99%

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Risk Assessment on Continued Public Health Threats: Evidence from China’s Stock Market

2020

IJERPH

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Given the disturbing effects of the coronavirus disease 2019 (COVID-19) outbreak, we are motivated to examine whether the continued increase of the provincial public health threats affects the firms’ accumulative abnormal return. Using the 178,805 firm-day observations from Chinese listed firms from 10 January to 31 March 2020, we find that the accumulative abnormal return is significantly lower among firms located in the provinces where face the continued increase of new confirmed COVID-19 cases. The relations remain constant after several robustness tests. These findings suggest that investors concern about the potential risk when firms are located in the provinces with higher threats to public health. We also find that the negative effect of increasing public health threats on abnormal return is weaker for firms surrounded by a provincial environment with stronger information accessibility and economic growth. Overall, this study extends the literature by presenting systematic evidence on the effect of the continued increase of provincial public health threats on the market reaction in Chinese listed firms.

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Section: Conclusion and Discussionmentioning

confidence: 99%

Section: Background Literature and Hypothesis Developmentmentioning

confidence: 99%

Risk Assessment on Continued Public Health Threats: Evidence from China’s Stock Market

2020

IJERPH

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“…The current study adopted the psychological measurement paradigm of Slovic [ 47 ], which suggests that disaster risk perception is a multi-dimensional concept. With consideration to the actual research area of China, and with reference to the measurement of risk perception in the studies by the authors of [ 10 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 ], this study measured risk perception with respect to the following three dimensions, namely, possibility, worry, and controllability ( Table 3 ). Before the factor analysis, Cronbach’s alpha reliability tests were carried out for each measure of risk perception.…”

Section: Methodsmentioning

confidence: 99%

Rural Households’ Livelihood Capital, Risk Perception, and Willingness to Purchase Earthquake Disaster Insurance: Evidence from Southwestern China

Liu²,

Wang

et al. 2018

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Earthquake disaster insurance can effectively reduce the impact of earthquake disasters on rural households. Exploring rural households’ willingness to purchase earthquake disaster insurance in earthquake disaster areas provides an understanding of the motivations underlying the implementation of an insurance policy. However, few studies have examined the perspectives of rural households, in order to explore the correlations between the rural households’ livelihood capital, their disaster risk perception, and their willingness to purchase earthquake disaster insurance. A cross-sectional survey data including 241 rural households from the most severe disaster counties (cities) during the 5 • 12 Wenchuan earthquake was examined with regard to rural households’ livelihood and disaster risk perception, and ordinal logistic regression models were constructed to explore rural households’ willingness to purchase earthquake disaster insurance, as well as the driving mechanism behind this willingness. The results showed that 34.44% of rural households were very willing to purchase earthquake disaster insurance, and 7.05% of rural households were very reluctant to purchase earthquake insurance. Rural households’ livelihood capital and risk perceptions were the most important factors affecting their willingness to purchase earthquake disaster insurance. Rural households with higher scores on natural capital, physical capital, possibility, and worry were more likely to purchase earthquake disaster insurance. Specifically, keeping all other variables constant, every one unit increase in nature capital and physical capital corresponded to an increase in the odds of willingness to purchase earthquake disaster insurance by a factor of 0.14 and 0.06, respectively; every one unit increase in possibility and worry corresponded to an increase in the odds of willingness to purchase earthquake disaster insurance by a factor of 0.03 and 0.04, respectively. This study contributes to the current literature by increasing the understanding of the relationships between Chinese rural households’ livelihood capital and risk perceptions, and their willingness to purchase earthquake disaster insurance.

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“…In a similar vein, Ref. [36] found that P/C insurers were, in terms of cumulative average abnormal returns from 10 days before to 10 days after hurricane landfall, insensitive to Hurricanes Katrina (2005) and Sandy (2012). These empirical findings are consistent with other studies of the impact-both immediate and subsequent-of Hurricane Katrina, highlighting that the short-term economic impact was small and perhaps suggesting that investors do not "overreact" to hurricanes.…”

Section: Financial Resilience In a Larger Contextmentioning

confidence: 80%

Insurer Resilience in an Era of Climate Change and Extreme Weather: An Econometric Analysis

Valverde

Convertino

2019

Climate

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Having sustained, over the course of more than two decades, record-breaking natural catastrophe losses, American insurers and reinsurers are justifiably questioning the potential linkage between anthropogenic climate change and extreme weather. Here, we explore issues pertaining to this linkage, looking at both the likely short-term implications for the insurance industry, as well as potential longer-term impacts on financial performance and corporate resilience. We begin our discussion with an overview of the implications that climate change is likely to have on the industry, especially as it relates to how catastrophic risks are construed, assessed, and managed. We then present the rudiments of an econometric analysis that explores the financial resilience of the property/casualty (P/C) industry in the face of both natural and man-made catastrophes. In this analysis, we explore the profitability consequences of several illustrative scenarios involving large-scale losses from extreme weather—specifically, a sequence of storms like those striking the U.S. in 2004—and a scenario that explores the prospect of a Katrina-scale storm in combination with a mass terror attack on the scale of 9/11. At systemic levels of aggregation, our analysis suggests a high degree of macro-resilience for the P/C industry. Moreover, we find that insurer resilience is higher for larger impacts, considering both the speed of recovery, as well as the inverse of the area under the unaffected system profile. We conclude with a summary of our findings and a closing commentary that explores the potential implications of these results for P/C insurers moving forward.

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Risk Perceptions on Hurricanes: Evidence from the U.S. Stock Market

Cited by 10 publications

References 22 publications

Risk Assessment on Continued Public Health Threats: Evidence from China’s Stock Market

Risk Assessment on Continued Public Health Threats: Evidence from China’s Stock Market

Rural Households’ Livelihood Capital, Risk Perception, and Willingness to Purchase Earthquake Disaster Insurance: Evidence from Southwestern China

Insurer Resilience in an Era of Climate Change and Extreme Weather: An Econometric Analysis

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