Major world events impact on stock market prices : -An event study

Abstract: Purpose – The purpose with this study is to, in light of the globally integrated world economy, examine the impact of Major World Events (MWE) on international stock market prices.Design/methodology/approach – The study uses an exploratory approach, in order to obtain a deeper insight in the phenomena, and to capture any price changes within an index, an event study methodology has been conducted. Findings – The authors found that stock markets react differently from certain categories of MWE. The only significant occurrence of spillover effects following a MWE was to be found for “positive” and “neutral” political events, and to “negative” economical events. Additionally, the authors provide evidence of that European stock markets follow similar patterns regarding in what extent they are affected when a MWE occurs.