The communicative impact of terrorist attacks on the financial marketplace: a perspective from the efficient market hypothesis

This study measures patterns following a terrorist attack, from the perspective of market efficiency, to determine the communicative impact of terrorist attacks on the financial marketplace. The Efficient Market Hypothesis postulates that asset prices fully reflect all available information. An important implication is that, because market price changes are determined by new information (or variations in discount rates), it would be highly difficult to “beat the market” with expert stock selection or market timing. Overall, we found that, based on mixed results, terrorist attacks do not lead to a distinguishable pattern in the financial marketplace. Nevertheless, drawing on the Yale Model of Persuasion, these results suggest that terrorists are effective in their communicative goals, and they do lead to a compelling pattern in the proportion of negative returns on the day of the attack. More precisely, terrorists are able to communicate their message on a global scale, thereby resulting in investors adjusting their estimates of value downward. While a possible price correction pattern was found, the lack of statistical analysis performed on the variables, to a certain degree of significance, is a limitation of this study that ultimately renders the results of the study inconclusive.

     

Why rehabilitate Stalin?

J. Arch Getty, Origins of the Great Purges: The Soviet Communist Party Reconsidered 1933–1938 (Cambridge: Cambridge University Press, 1985). Pp.275; £25.

Robert Conquest, Inside Stalin's Secret Police: NVKD Politics 1936–39 (London: Macmillan, 1985). Pp.222; £29.50.     

Life on the Cusp of Ruins

More than a few of my students at Tsinghua University were perplexed by my decision to spend this Labor Day holiday (May 1) vacationing in Shanxi Province. At the heart of China’s coal belt,     

The Relationship Between Anxiety Disorders and Substance Use Among Adolescents in the Community: Specificity and Gender Differences

Using a sample of 781 adolescents (ages 13–17, 52.8% male) from a community survey, this study examined gender differences in the co-occurrence of specific anxiety disorders with substance use in adolescents. The associations between anxiety disorders and substance use differed according to the particular anxiety disorders and forms of substance use being examined, as well as by gender. Social phobia was associated with cigarette smoking among boys only. For girls, social phobia appeared to be negatively associated with drug use. For the other anxiety disorders, the associations with substance use tended to be stronger among girls. These findings highlight the need to improve clinical recognition of the anxiety disorders and to improve treatment access for afflicted adolescents. Future studies based on longitudinal data could further elucidate the relationships among anxiety disorders, gender, and substance use.     

The Participation Paradox of Indigenous Autonomy in Mexico

As indigenous movements around the world seek to strengthen their collective voice in their respective political systems, efforts continue to design political institutions that offer both sufficient local autonomy and incentives to participate in the broader political system. The state of Oaxaca, Mexico, offers a test case of one such effort at indigenous‐based institutional design. This article argues that such reforms often fail to confront the tension between local autonomy and citizen engagement in politics outside the borders of the community. Testing this theory through a comparative analysis of voter turnout rates in municipalities across the state of Oaxaca and the neighboring state of Guerrero, this study finds that the adoption of indigenous institutions at the local level is associated with significantly lower voter turnout rates for national elections.