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MARKET FORCES AND AIRCRAFT SAFETY AN EXTENSION
Author(s) -
KARELS GORDON V.
Publication year - 1989
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1989.tb00786.x
Subject(s) - shareholder , crash , economics , stock market , liability , stock market crash , extension (predicate logic) , work (physics) , business , finance , engineering , computer science , corporate governance , mechanical engineering , paleontology , horse , biology , programming language
Recent work by Chalk focuses on whether market forces provide safe products via stock market reaction to unanticipated events. Chalk finds a $200 million decline in McDonnell Douglas stockholder wealth related to the 1979 DC‐10 crash in Chicago. That decline far exceeds reasonable estimates of regulatory and liability costs, suggesting a market penalty for unsafe products. His results, however, do not seem consistent with the notion of efficient markets, as American Airlines maintenance procedures were quickly identified as the likely cause of the crash. This study finds no resulting shareholder wealth loss for American Airlines or McDonnell Douglas.