How to trade stock after an airplane has crashed

When an airplane crashes with fatal consequences, the stocks of both the airline and the manufacturer of the airplane are impacted too. This research investigated this impact for a st th sample of cases between January 1 , 2000, and March 15 , 2020. The research was conducted through an event study with 26 cases for the operator and 32 cases for the manufacturer. On the day of the crash, the most significant impact on the equity value of an airline is visible (-5.27% on average). In the 20 trading days following, there is recovery visible, to levels to -4.16% on t=20, which is no longer significantly negative due to the widespread in returns among the sample. The same pattern is visible for the manufacturer of the aircraft. On the day of the crash, the impact is significantly negative (-1.87% on average). In the days following there is some recovery visible, which results in a return that is no longer significantly negative on t=20 (-1.63%), due to the wide spread of returns. The sample lacks statistically significant evidence for a profitable investment opportunity, in which investing right after the crash would pay off on t=20. This means there is no proven strategy that would pay-off for an investor. For this reason, an investor should -statistically speaking- hold his stock, since the market has priced the shares fairly right by the end of the trading day right after the crash. As a result, the Efficient Market Hypothesis has to be accepted, which means there is no statistical evidence the market has not priced the equity of both kinds of firms well.