Open AccessInsurer Stock Price Responses to Hurricane Floyd: An Event Study Analysis Using Storm Characteristics
Author(s) -
Bradley T. Ewing,
Scott E. Hein,
Jamie Brown Kruse
Publication year - 2006
Publication title -
weather and forecasting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.393
H-Index - 106
eISSN - 1520-0434
pISSN - 0882-8156
DOI - 10.1175/waf917.1
Subject(s) - storm , landfall , stock price , stock market , meteorology , tropical cyclone , actuarial science , environmental science , business , history , geography , geology , paleontology , context (archaeology) , archaeology , series (stratigraphy)
This research uses an event study methodology to examine the effect of Hurricane Floyd and the associated scientific and media releases on the market value of insurance firms. The research is unique in that information describing the development of the storm over time and space is incorporated to determine how the financial market reacted to changing news about a storm's characteristics. Key empirical results can be summarized as follows. Overall, there was a negative effect on insurer stock price changes around the synoptic life cycle of the storm; however, this effect was neither constant nor was it always negative on each day of the cycle. Significant market reaction to the news concerning the path and strength of the storm prior to the storm landfall was found. The results herein suggest that markets find reliable time-sensitive reports provided by the National Weather Service, the National Hurricane Center, and other media outlets to be valuable information.