The impact of terrorist attacks on international stock markets

D. Brounen, J.M.M. Derwall

Research output: Contribution to journalArticleScientificpeer-review

128 Citations (Scopus)


We examine the effects of terrorist attacks on stock markets, using a dataset that covers all significant events and that directly relate to the major economies of the world. Our event study suggests that terrorist attacks produce mildly negative price effects. We compare these price reactions to those from an alternative type of unanticipated disaster, earthquakes, and find that price declines following terror attacks are more pronounced. However, in both cases prices rebound within the first week of the aftermath. We also compare price responses internationally and for separate industries, and find that reactions are strongest for local markets and for industries that are directly affected by the attack. Our results suggest that financial markets react strongly to terror events but then recover swiftly and soon return to business as usual. The September 11th attacks turn out to be the only event that caused long-term effects on financial markets, especially in terms of industries' systematic risk.
Original languageEnglish
Pages (from-to)585-598
JournalEuropean Financial Management
Issue number4
Publication statusPublished - 2010


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