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Banking Scandals and Long-Term Stock Price – An Event Study

by Reohr, James

Abstract

This study aims to identify the effects of American bank scandal penalties on long-term stock price utilizing the Fama-French three-factor model and an event study methodology. We hypothesize that bank penalties have a profoundly negative role on long-term bank stock prices. We examine 145 penalties over 4,526 trading days for the ‘Too Big to Fail’ American banks JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America. Adjusted closing price stock data and penalty data is drawn from an 18-year period spanning from 2000-2017. In the long-run, penalties were found to have no statistically significant impact on stock price, implying that ‘Too Big to Fail’ fail banks enjoy market capitalization benefits from their government designation.

Note

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Includes bibliographical references.

Administrative Notes

The author has given permission for this work to be deposited in the Digital Archive of Colorado College.

Colorado College Honor Code upheld.

Copyright
Copyright restrictions apply.
Publisher
Colorado College Tutt Library
PID
coccc:29675
Digital Origin
born digital
Extent
26 pages : illustrations
Thesis
Senior Thesis -- Colorado College
Thesis Advisor
Dan Johnson
Department/Program
Economics and Business
Degree Name
Bachelor of Arts
Degree Type
bachelor
Degree Grantor
Colorado College Tutt Library
Date Issued
2018-05