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

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.