The Impact of MTSA on Financial Risk and Volatility of Marine Firms

This paper documents research analysing the effects of the Maritime Transportation Security Act (MTSA) on a set of marine operator stocks listed on Nasdaq and the New York Stock Exchange (NYSE). The paper investigates whether MTSA resulted in a structural change in systematic risk for these companies. The paper conducted event studies using the market model to estimate the effect of MTSA on systematic risk. The empirical evidence shows that MTSA resulted in a structural reduction in systematic financial risk. These results had positive implications for the cost of these operators in raising capital. The results also show a substantial reduction in idiosyncratic risk and conditional systematic risk following MTSA which had a positive effect on market risk and liquidity. As a whole, MTSA was able to mitigate some of the increased financial risk associated with 9/11 for marine operators. From a policy standpoint, MTSA provided ancillary economic benefits by reducing these risks.

Language

  • English

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Filing Info

  • Accession Number: 01046900
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Apr 9 2007 1:02PM