A disaster comparable to major emblematic accidents magnitude

The oil spill off the coast of Louisiana caused by the leak, always clogged step, British Petroleum (BP) platform, drawn more to raise concerns. Investors also. Thus, between 20 and 30 April, BP has seen its amputee market capitalization of $ 25 billion, or a decline of 12. A fall which is accentuated after the statements of the President Barack Obama, believing that BP should pay all the costs of clean-up of this disaster. A disaster comparable to major emblematic accidents magnitude.

The ecological disaster of the "Exxon Valdez" was in translated by a 12 fall in the course of the oil group one month after, and that of Bhopal by a fall of 30 of Union Carbide. "Short term, the decline recorded by BP is somewhat more important than the falls that followed the explosion of a BP in 2005 Texas refinery or the explosion of the Total AZF plant in 2001." "The question now is whether these setbacks and threats to their titles are of sufficient magnitude to encourage groups to improve the security of their facilities to protect the environment", noted Marie-Aude Lagunade the University Paris-Dauphine and Gunter Capelle-Blancard of the University of Paris-I Panthéon-Sorbonne, a study on the stock market impact of environmental disasters (1). Sixty-four accidents (explosion...) in the petrochemical industry between 1990 and 2005 were analysed. A quarter of them resulted in toxic releases into the environment and half have been the direct victims. If three quarters of these events have lowered the course of the groups involved, the impact has been significant for an accident on four.

Decrease in light of the gravity

The reaction of the market is instant. In two sessions, day in the aftermath of the accident, the course of the company responsible for the disaster gives 1.3, or a fall average $ 306 million of their market capitalization: the invoice exceeds $ 1 billion for 10 of the disasters. Lower rises according to the severity. Thus, a death or wounded serious and is a further decline of the market capitalization EUR 164 million. Much more expensive, a toxic release into nature results in an average fall of $ 1 billion (in a broad range of 190 million to $ 1.8 billion). Markets need time to evaluate all financial consequences (damage assessment, insurance...) of the disaster. They will reassess then or not risk to invest or remain invested in the company that is the cause.

Thus, until six months after an accident of petrochemical, a group of toxic releases records a decrease of 12 of its market capitalization. Which augurs in the case of BP still disappointing stock route in the future. And, even more that it will have to probably do this with a series of trial, long and the uncertain outcome.

Investors further penalize repeat offenders: the fall of their action is more pronounced for companies with long histories in respect of the environment and the effect on their reputation is likely to be disastrous. In other cases, the market is ready to grant, to some extent, the benefit of the doubt: the accident can be caused by bad luck or a malicious act, as some realized in the case of the AZF plant.