The Deepwater Horizon explosion had considerable environmental, economic, and regulatory impacts. We examine oil companies' cumulative abnormal returns related to the date of the rig explosion, as well as announcements regarding insurance liability, insurance premiums for offshore drilling, and deepwater drilling moratorium events. We find no statistically significant stock response to the rig explosion itself – mostly likely given the incompleteness of information at the spill's beginning. We do find firms directly involved with the Deepwater Horizon show negative responses to the moratorium on drilling in the Gulf of Mexico along with evidence that firms emphasizing drilling and service to existing oil wells also react negatively. Our results further show negative impacts from the possibility of increased financial assurance and insurance costs for firms involved in the pipeline and bulk station and terminal areas. Finally, firms with a weaker financial position (higher leverage) tend to have lower returns. In all, results support contagion more than competitive effects.



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