Open AccessMarket Reaction to Health Care Law: An Event Study
Author(s) -
Musab Ababneh,
Alex P. Tang
Publication year - 2013
Publication title -
international journal of accounting and financial reporting
Language(s) - English
Resource type - Journals
ISSN - 2162-3082
DOI - 10.5296/ijafr.v3i1.3356
Subject(s) - health insurance , supreme court , event study , event (particle physics) , health care , business , patient protection and affordable care act , actuarial science , law , political science , paleontology , context (archaeology) , physics , quantum mechanics , biology
We investigate the effect of the U.S. Supreme Court’s decision to uphold President Obama’s health care reform (Patient Protection and Affordable Care Act), and other reform-related events, on the stocks of impacted firms. More specifically, we use an event study methodology to compute cumulative average abnormal returns (CAARs) for health insurance companies, hospitals, brand-name drug makers, and generic drug makers. Overall, we find that the law has a negative effect on health insurance companies, and on generic drug makers. On the other hand, it has a positive effect on hospitals and on brand-name drug makers.