The impact of terrorism on United States industries

This research tests United States industry equity indices returns in order to determine if terrorism has some industry-specific effect. I use the event-study approach applied to 135 industrial equity return series in assessing industry level reaction to 11 September , the Bali bombing and the Madrid bombing. The event study method used in this paper is adjusted for GARCH effects. The results show that inmdustries react unevenly to terrorism. Following 11 September, airline, hotel and leisure industries exhibit negative abnormal returns while water, defence and telecom experienced positive returns. There was little impact on the US industry equity returns with the Bali and Madrid attacks, suggesting that US industries werer only moderately sensitive to these attacks