A new study in PLOS ONE investigates how mass shootings influence the stock price of firearms manufacturers. While it is well known that mass shootings lead to increased firearms sales, the response from financial markets is unclear. On one hand, given the observed short-term increase in demand, firearm stock prices may rise due to the unexpected financial windfall for the firm. On the other, mass shootings may result in calls for regulation of the industry, leading to divestment of firearms stocks in spite of short-term demand. The study examines this tension using a market movement event study in the wake of 93 mass shootings in the U.S. between 2009 and 2013. Findings show that stock prices of firearm manufacturers decline after shootings; each event reducing prices between 22.4 and 49.5 basis points, per day. These losses are exacerbated by the presence of a handgun and the number of victims killed, but not affected by the presence of children or location of the event. Finally, the study finds that these effects are most prevalent in the period 2009–2010 but disappear in later events, indicating that markets appear to have accepted mass shootings as the “new normal.”
Above, a Glock 17, one of the two guns used in the Orlando shooting. Credit
Lee Fang writes in The Intercept that in recent corporate presentations, leading gun makers celebrated the fact that consumers bought more firearms because of the December terrorist attack in San Bernardino. And, prior to the massacre at a gay nightclub in Orlando on Saturday night, executives were telling investors to expect another big bump — because of the upcoming elections.