School of Business

The Relationship Between the Equity Return Levels of Oil Companies and Unanticipated Events The Case of the Exxon Valdez Accident

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Description: An examination was conducted of the effects of the March 24, 1989, grounding of the tanker Exxon Valdez on the equity return levels of several major oil companies. The multivariate regression model methodology was used, and the results indicate that the equity prices of the affected firms immediately and fully reflected the relevant information associated with the accident. Additionally, the evidence reveals that the market was able to discriminate among the oil companies based on their levels of exposure to the Trans-Alaska Pipeline. The lack of significant abnormal equity price changes for those firms that were, at most, only marginally affected by the accident suggests that the market did not view the disaster as having industrywide repercussions.
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