Terrorism and Patriotic Investors: Evidence from the 1920 Wall Street Bombing

Abstract

This paper argues that patriotism does not necessarily account for market resilience in the face of terror. Studying the 1920 Wall Street bombing, I find that rallying-around-the-flag does not explain the upbeat nature of the first trading session after the attack. In fact, NYSE-traded firms with patriotic terms (such as "American'' or "U.S.'') in their name underperformed by 1 percentage point. The absence of a clear international actor behind the attack may explain the absence of patriotic trading. I also point out an alternative, economic reason for the upbeat market, which centers around Mexican Petroleum’s postponement of its ex-dividend date.