Mass Shootings Influence On Stocks: Traders, Guns, And Money by SSRN

Anandasivam Gopal

University of Maryland – Robert H. Smith School of Business

Brad N Greenwood

Temple University – Department of Management Information Systems

March 20, 2015

Robert H. Smith School Research Paper No. RHS 2581664

Fox School of Business Research Paper No. 15-061


In this work, we investigate how mass shootings influence the stock price of firearms manufacturers. While significant anecdotal evidence suggests there is an immediate spike in firearms purchase after such events, the reaction of financial markets is unclear. On one hand, if the increased short-term demand represents an unanticipated financial windfall for firearms manufacturers, the stock prices of the firms may rise. On the other hand, mass shootings may result in perceptions of the social contract between the firm and society being systematically violated. In this case, the increasing potential for regulation may render the firm’s business model untenable in the long run, leading to stock prices decreasing. We empirically resolve this tension using a market movement event study of 93 mass shootings between 2009 and 2013. Findings suggest that stock prices of firearm manufacturers significantly decline over a 2, 5, 10, and 30 day window in the wake of mass shootings. Furthermore, these losses are exacerbated by the presence of a handgun and the number of victims killed. Interestingly, results are not influenced by the location of the crime, insofar as there is no difference across “red” or “blue” states, or the loss of a child.

Traders, Guns, And Money – Introduction

In recent years, the American public has continued to be traumatized by mass shootings; events where individuals suffering from mental health issues or psychological trauma and access to firearms open fire on strangers in seemingly senseless acts of violence (Kellermann and Rivara 2013). Although scholars and policy makers have speculated at length regarding the impetus for such events, one plausible explanation which continually has surfaced is the easy access to firearms in the US (Acquisti and Tucker 2010). In 2013, for example the Washington Post reported that among OECD countries, the US had the highest number of firearms per capita, as well as the highest gun-related deaths per capita (Fisher 2012). However, although the issue of gun control remains a controversial topic receiving significant political and social debate, ranging from the constitutionality of the government’s attempts to regulate and control gun sales to pre-emptive treatment for the mentally unstable (Graziano and Pulcini 2013), one aspect of mass shootings and gun violence is often ignored: the response of financial markets to the role firearm manufacturers play in these shootings. More specifically, if firearm manufacturers are held responsible by financial markets for manufacturing the very products used in these incidents. This broad question: how financial markets respond to these events in terms of the stock prices of firearm manufacturers; forms the core of the research reported in this paper.

While gun violence within the US occurs in many disparate forms, the most distressing and visible form of such violence are mass shootings. Defined by the Federal Bureau of Investigation (FBI) as any incident where at least four persons are killed with a firearm in a random act with little or no premeditation (Mayors Against Illegal Guns 2013)1, these events can occur in private homes, in the shooter’s current or prior workplace, and even in schools and universities. Names such as Columbine and Sandy Hook Elementary have become cultural markers in the US, capturing the essence of the randomness of such events. The specific form of weapon used in these events also varies; Mayors Against Illegal Guns (2013) report that approximate 15% of shootings between 2009 and 2013 were with automatic weapons, resulting in significantly more deaths compared to crimes where handguns are used exclusively. Finally, in 43% of such incidents, the perpetrator ended up committing suicide, further implicating the role of mental health as a critical factor.

mass shootings

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