<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Over the last decades, terrorism has become a global phenomenon to which every society is exposed from time to time. Terrorist attacks can have many economic consequences that may affect a number of sectors, including the capital market. The main goal of this paper is to examine the reaction of the CAC40 index to one terrorist attack, mainly “Charlie Hebdo” using an event study methodology. By calculating the abnormal returns and the cumulative abnormal returns in the event period, the results obtained show no significant abnormal returns on the day of the terrorist attack suggesting that the market had directly absorbed the effect of the attack. Thus, the findings suggest that the French market is semi-strong efficient. Investors can rely neither on past information nor on publicly available information to make abnormal profits.</p></abstract>

Over the last decades, terrorism has become a global phenomenon to which every society is exposed from time to time. Terrorist attacks can have many economic consequences that may affect a number of sectors, including the capital market. The main goal of this paper is to examine the reaction of the CAC40 index to one terrorist attack, mainly “Charlie Hebdo” using an event study methodology. By calculating the abnormal returns and the cumulative abnormal returns in the event period, the results obtained show no significant abnormal returns on the day of the terrorist attack suggesting that the market had directly absorbed the effect of the attack. Thus, the findings suggest that the French market is semi-strong efficient. Investors can rely neither on past information nor on publicly available information to make abnormal profits.

The CAC 40 Index’s Reaction to Terrorist Attacks: The Case of Charlie Hebdo

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"The CAC 40 Index\u2019s Reaction to Terrorist Attacks: The Case of Charlie Hebdo"}

Over the last decades, terrorism has become a global phenomenon to which every society is exposed from time to time. Terrorist attacks can have many economic...

The CAC 40 Index’s Reaction to Terrorist Attacks: The Case of Charlie Hebdo

Published Online: Sep 16, 2019

Page range: 55 - 72

DOI: https://doi.org/10.2478/sbe-2019-0025

Keywords
Efficient Market Hypothesis, CAC40, terrorist attack, January effect, Mean Market Adjusted

© 2019 Khoury Rim El, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

The CAC 40 Index’s Reaction to Terrorist Attacks: The Case of Charlie Hebdo

Published Online: Sep 16, 2019

Page range: 55 - 72

DOI: https://doi.org/10.2478/sbe-2019-0025

KeywordsEfficient Market Hypothesis, CAC40, terrorist attack, January effect, Mean Market Adjusted

© 2019 Khoury Rim El, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Efficient Market Hypothesis, CAC40, terrorist attack, January effect, Mean Market Adjusted