Fatal accidents in the mining industry – do investors react rationally?

Sammanfattning: The mining industry is characterized by a hazardous working environment for its employed blue-collar workers and a general complexity of valuation for investors. By theories of behav-ioral finance, corporate social responsibility, and others outlined in the following, this makes a setting where one could plausibly expect reactions and even overreactions among investors to fatal accidents incurred among employed miners related to the mining operations. To investigate this, an event study was performed, studying cumulative abnormal returns of the event date and its following nine days. Furthermore, a trading strategy based on the hypothesized market ab-normality was simulated and analyzed. T-tests were conducted on the initial negative reactions, the rebound tendency, and the complete event window, both with winsorized and non-winsorized residuals. While the study failed to confirm the hypothesized tendencies at the 5% level of significance and the trading strategy was concluded not superior, the shape of the re-sults, when plotted, were in line with them. However, these results should be viewed and inter-preted with caution; this due to not only the test’s de facto insignificance and weakness, but also by the criticism of intentionally searching for patterns in data.