Stock market’s reaction to self-disclosure of work safety accidents: an empirical study in China

Work safety accidents are one of the major technological risks that modern enterprises face. As investors became more concerned about information justice, the study of the relationship between corporate negative information disclosure and their stock market returns is of practical significance. In this study, the stock market’s reaction to information self-disclosure of safety accidents is investigated multi-dimensionally for Chinese listed firms, including variables such as timing of information release, firm ownership, industry type, media attention to the accident, and the number of deaths. Based on 130 industrial accidents announcements made by publicly listed firms in China from 2007 to 2014, we use the event study method to investigate the extent to which the stock market responds to the safety accidents announcements. The relationship between accumulative abnormal return and its impact factors is examined by multivariate analysis. The results indicate that the stock market reacts negatively after the self-disclosure of work safety accidents. Our results also suggest that several factors—timing of information release, firm ownership and industry type, have significant effects on firms’ reactions in terms of market value.