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Investor Reactions to Major Events in the Global Financial Crisis in Europe and Asia-Pacific

Advances in Pacific Basin Business, Economics and Finance

ISBN: 978-1-83753-865-2, eISBN: 978-1-83753-864-5

Publication date: 4 April 2024

Abstract

The global financial crisis (GFC) of 2007–2008 had far-reaching consequences for the global economy, triggering widespread economic turmoil. We use the event-study method to investigate whether investors priced the effect of significant events before the Lehman Brothers' bankruptcy in European and Asia-Pacific banks. Abnormal returns on the event days range from −4.32% to 5.03% in Europe and −5.13% to 6.57% in Asia-Pacific countries. When Lehman Brothers went bankrupt on September 15, 2008, abnormal returns averaged the lowest at −4.32% in Europe and −5.13% in Asia-Pacific countries. The significant abnormal returns show that Lehman Brothers' collapse was a turning point, and investors paid attention to the precrisis events as warning signs of the oncoming crisis.

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Acknowledgements

Acknowledgments

This chapter is based on the PhD Dissertation of Emre Bulut. The authors are grateful to Levent Akdeniz, Belma Öztürkkal, Banu Demir-Pakel, and İlkay Şendeniz-Yüncü for valuable comments and suggestions.

Citation

Bulut, E. and Tanyeri-Günsür, B. (2024), "Investor Reactions to Major Events in the Global Financial Crisis in Europe and Asia-Pacific", Lee, C.-F. and Yu, M.-T. (Ed.) Advances in Pacific Basin Business, Economics and Finance (Advances in Pacific Basin Business, Economics and Finance, Vol. 12), Emerald Publishing Limited, Leeds, pp. 215-250. https://doi.org/10.1108/S2514-465020240000012009

Publisher

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Emerald Publishing Limited