000			02907cam a22003497 4500
001			w13355
003			NBER
005			20211020111958.0
006			m o d
007			cr cnu||||||||
008			210910s2007 mau fo 000 0 eng d
100	1		_aDellaVigna, Stefano. _99168
245	1	0	_aDetecting Illegal Arms Trade / _cStefano DellaVigna, Eliana La Ferrara.
260			_aCambridge, Mass. _bNational Bureau of Economic Research _c2007.
300			_a1 online resource: _billustrations (black and white);
490	1		_aNBER working paper series _vno. w13355
500			_aAugust 2007.
520	3		_aIllegal arms are responsible for thousands of deaths in civil wars every year. Yet, their trade is very hard to detect. We propose a method to statistically detect illegal arms trade based on the investor knowledge embedded in financial markets. We focus on eight countries under UN arms embargo in the period 1990-2005, and analyze eighteen events during the embargo that suddenly increase or decrease conflict intensity. If the weapon-making companies are not trading or are trading legally, an event worsening the hostilities should not affect their stock prices or affect them adversely, since it delays the removal of the embargo. Conversely, if the companies are trading illegally, the event may increase stock prices, since it increases the demand for illegal weapons. We detect no significant effect overall. However, we find a large and significant positive reaction for companies head-quartered in countries where the legal and reputation costs of illegal trades are likely to be lower. We identify such countries using measures of corruption and transparency in arms trade. We also suggest a method to detect potential embargo violations based on stock reactions by individual companies, including chains of reactions. The presumed violations are higher for conflicts with more UN investigations and for companies with more Internet stories regarding embargo.
530			_aHardcopy version available to institutional subscribers
538			_aSystem requirements: Adobe [Acrobat] Reader required for PDF files.
538			_aMode of access: World Wide Web.
588	0		_aPrint version record
690		7	_aG14 - Information and Market Efficiency • Event Studies • Insider Trading _2Journal of Economic Literature class.
690		7	_aJ00 - General _2Journal of Economic Literature class.
690		7	_aO17 - Formal and Informal Sectors • Shadow Economy • Institutional Arrangements _2Journal of Economic Literature class.
700	1		_aFerrara, Eliana La.
710	2		_aNational Bureau of Economic Research.
830		0	_aWorking Paper Series (National Bureau of Economic Research) _vno. w13355.
856	4	0	_uhttps://www.nber.org/papers/w13355
856			_yAcceso en línea al DOI _uhttp://dx.doi.org/10.3386/w13355
942			_2ddc _cW-PAPER
999			_c334773 _d293335