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Terrorist attacks and total factor productivity

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  • Mun, Seongjae
  • Han, Seung Hun
  • Kim, Hyeong Joon

Abstract

This study examines the impact of terrorist attacks on total factor productivity (TFP). Using measures of attack proximity in the U.S., we find strong evidence that terrorist attacks overall reduce firm-level TFP. Specifically, the firms located near terrorist attacks experience a nearly 3.4% TFP decrease in standard deviation units. Our evidence is robust to a battery of additional tests, and the impact of terrorist attacks on TFP is more pronounced for high-competition industries and firms with high tangibility.

Suggested Citation

  • Mun, Seongjae & Han, Seung Hun & Kim, Hyeong Joon, 2021. "Terrorist attacks and total factor productivity," Economics Letters, Elsevier, vol. 202(C).
    • Handle: RePEc:eee:ecolet:v:202:y:2021:i:c:s0165176521000859
    DOI: 10.1016/j.econlet.2021.109808
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    References listed on IDEAS

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    Cited by:

    1. Kim, Hyeong Joon & Mun, Seongjae, 2022. "Terrorist attacks and corporate investment: The beneficial value of CEO overconfidence," International Review of Financial Analysis, Elsevier, vol. 84(C).
    2. Khusrav Gaibulloev & Todd Sandler, 2023. "Common myths of terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 271-301, April.
    3. Kim, Hyeong Joon & Han, Seung Hun & Mun, Seongjae, 2022. "Analyzing the effects of terrorist attacks on the value of cash holdings," Finance Research Letters, Elsevier, vol. 45(C).
    4. Huang, Wenxuan & Xu, Weidong & Gao, Xin & Li, Donghui & Fu, Wentao, 2023. "Terrorist attacks and CEO compensation: UK evidence," Research in International Business and Finance, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Terrorist attacks; Total factor productivity;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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