International Journal of Business and Economics Volume 23, No. 1 June, 2024

Unraveling Market Dynamics: Assessing the Diverse Impact of Terrorism on Sectoral Equity Values in the MENA Region

Wael Abdallah

Department of Management, The American University in Cairo, New Cairo, Egypt

Abstract

This study explores how sectors in the MENA region exhibit disproportionate responses to terrorism and external shocks. The empirical methodology employs microdata at the firm level, encompassing various sectors in MENA countries from 2016 to 2020. The findings of this research unveil the nuanced effects of terrorism across different sectors. For instance, Terrorism incidents have notably negatively impacted sectors such as Consumer Cyclical, Consumer Non-Cyclical, and Industrial, leading to a decline in the market equity value. However, intriguingly, they positively influence the market equity value of Financial sectors within the MENA region. Furthermore, the degree of these negative and positive impacts appears to vary based on the severity of the terrorism incidents. The main contribution of this study lies in its comprehensive exploration of how terrorism incidents influence firm market equity value, shedding light on sector-specific vulnerabilities and resilience strategies.

Keywords：Sectoral Equity Values, Terrorism incidents, Financial Market, MENA region

JEL Classifications：E44, G11, G14

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