Market Reaction to Railroad Accidents

Railroad accidents have become more common and seen in recent years. These accidents impose many costs on the railroad, from legal costs, cleanup, damages, and shifts in usership. While there has been a great deal of research into the effects of aviation accidents on airline stock prices, I only found two papers investigating the effects railroad accidents on stock prices of the railroad. However, there are methodological concerns for these previous studies. As such I implement an event study to investigate the effect of railroad accidents on the stock price of the railroad. I find little impact on the stock prices of the railroads, contradicting previous research. I discuss potential causes of these differences and include areas for further research involving availability of information.