BRUMADINHO ACCIDENT IN MINAS GERAIS
APPRAISAL OF VALES S.A.'SHARES AND ITS PEERS
DOI:
https://doi.org/10.51320/rmc.v24i3.1480Keywords:
Brumadinho accident, corporate disasters, abnormal returns, event study, uncertain information hypothesisAbstract
This study aims to analyze the reaction on the price of Vale’s assets, national and international peers, as a result of the Brumadinho-MG disaster in 2019. Following the literature presented by Campbell et al. (1997), MacKinlay (1997) and Kliger and Gurevich (2014), the research adopts the Event Study Approach (ESA) to assess the effect on the daily return the pricing of shares resulting from the information disclosed around the event of interest. The study is relevant to the literature because it brings the effect of a corporate event on companies in the sector, it is also relevant for investors to perceive the damage that a catastrophic event causes on the price of assets of the company directly involved and their peers, considering reputational damage to your image. The results from Vale indicate that, initially, the event showed significant negative returns, which adjusted over the course of the period with the arrival of new information. In its national peers, post event variations were observed, although some returns were not significant over the period. In international pairs, the results had the opposite movement to those of Vale, with favorable returns for companies. The contributions of the study are to verify the reaction of the market and how the sector was affected by the catastrophe in the face of corporate disasters and to help investors interpret uncertainties, in terms of portfolio management, in the face of a fall caused by unexpected events.
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