Conflict Minerals Regulatory Events’ Impacts on Stock Price Returns in the US: Lessons for future conflict mineral policy

University essay from Göteborgs universitet/Graduate School

Author: Eric Bronstein; [2015-07-13]

Keywords: ;

Abstract: ABSTRACTOver the past ten years, awareness about the problem of conflict minerals, those which are mined and used by rebel groups to finance conflict in certain countries, has grown in many areas of the world. In the United States, this awareness culminated in Section1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 which authorized the US Securities and Exchange Commission to issue a formal conflict minerals policy called the Conflict Minerals Rule. As this genre of policy is new and likely to see continued debate around the world, this study aims to assess the impacts of conflict mineral regulatory events on the stock price returns of the industries which the policy is intended to govern. The analysis tests if events in favor of conflict mineral policy generate negative cumulative abnormal returns, and to do so, I employ an event study methodology using publicly available stock price data and regulatory events spanning from congressional debates preceding the Dodd-Frank Act in 2010 through to the most current of legal challenges which followed the SEC’s rule issuance. Though certain industries do report sporadic significant abnormal returns to certain regulatory events, the data suggests that there is no negative systematic effect on returns for the industries most expected to be impacted by the Conflict Minerals Rule.

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