Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Introduction The terrorist attack on the World Trade Center on September 11, 2001 (9/11) has changed the way in which business values risk. Prior to this event, terrorist attacks targeted US property and persons in non-US locations. Many US companies have endured such attacks for many decades. The Overseas Private Investment Corporation (OPIC) as well as private insurers provides products to limit war and terrorism loss and the risk of doing business overseas. Until 9/11 US domestic terrorist attacks were considered as non-recurring. However, after 9/11, such attacks are part of business continuity planning, insurance underwriting, and the course of business planning activities. The destabilization of US industry after 9/11 was accompanied by several corporate debacles and bankruptcies unrelated to 9/11 itself, including Enron, Worldcom, and more recently Parmalat and the Mutual Fund industry. Business prior to 9/11 was aware of non-recurring events such as the first World Trade Center attack, or the effect of hurricanes on business and property value. But at the same time, business seemed to underestimate the impact of such events on their operations, let alone prepare through insurance or operational and strategic means, for such events should they occur. This short research note explores the effect of the 9/11 terrorist event on shareholder value for certain companies that are involved in the oil and gas industry. Oil and gas companies are typically global in nature, engage in country-level activities, contracts, and economic events, and are the subject of global treatment in nearly all of their activities. At a country level, oil companies gain concessions to strategic energy resources through production sharing agreements that are tantamount to treaties with foreign powers. Their operations require global protection of sea lanes, on and offshore lifting and production facilities, environment, and financial arrangements. These companies produce, transport and deliver a commodity that is the fundament of all economies, energy. As such they play a pivotal role in the decisions of global policy-makers and terrorists alike. This study is not exhaustive, but only directionally indicative of the strength of impact of such an event on business value, and thus is highly preliminary in nature. Three areas are assessed: 1. The degree and direction of shareholder value impact. This study hypothesizes that oil companies will experience an immediate negative impact following the 9/11 event. 2. The persistence of shareholder impact. This study hypothesizes that oil industry companies are regularly in the business of insuring, through diversification and other means, immediate negative outcomes and that such impacts are not persistent after the event. 3. The volatility of share price response. This study also hypothesizes that oil industry companies will experience a higher immediate level of share value volatility that declines due to forces that dampen the persistence of shareholder impact. Shareholder Impact This study builds on two studies of the impact of terrorist events on shareholder value. Cummins and Lewis (2002) develop a model of terrorist impact on insurance company value and the resulting change in insurance contract pricing. Their conclusion is that such an event simultaneously and severely depresses insurance industry shareholder returns and increases shareholder return volatility. Subsequently, and consonant with a long term persistence in negative impacts, there is a flight to quality underwriting and an increase in the price of insurance. Abadie and Gardeazabal (2001) study the impact of terrorist conflict in the Basque Country on shareholder value. They find that per capita GDP I the Basque Country declined by 10 per cent and widened relative to more stable areas during times of terrorist attacks. Stocks of firms were positively impacted by times of credible truce with terrorist groups. They conclude with the sobering thought that their study may aid terrorists by documenting the negative economic impact of terrorist action, an outcome that ostensibly is one goal of terrorism. Both studies rely on the efficiency of financial markets to impound new information into stock prices through supply and demand of shares. Stock prices should react only to new information. Therefore, in the case of insurance companies, their stock prices should have been negatively impacted due to the increase in potential claims caused by a reassessment of potential loss from terrorist attacks. As security increases, businesses prepare for such losses in their plans and operations, insurance company returns should become less negatively impacts and improve over time, at least relative to the new information about terrorist attack preparation. In the case of Basque companies, as a truce is negotiated, company shares should react positively to this new information, and negatively when a cease-fire is about to be violated. In this study, the new information is an unprecedented terrorist attack of magnitude on US soil. Stock prices should be depressed given the impact of such an impact on US GNP, consumer, investor and saver's perceptions, confidence in the future, and business ability to coordinate operations. All of these drivers of shareholder value were affected, and in turn, negatively impacted market prices. Thus oil company prices should also be immediately and negatively impacted. With a rise in economic volatility, oil company prices should also experience at least a temporary increase in volatility, an indicator of market perception of potential risks ahead. However, given oil company assets, strategies and operations that deploy globally, innovate with each new find and event, and impound pervasive loss controls contractually and operationally, oil company stocks should not experience lasting and persistently negative impacts. Oil companies tend to possess global and local knowledge and skills that can compensate for events such as terrorism through preparation. Also, since oil company assets are located in several non-US locations, the impact of non-US terrorist events on shareholder value has already been impounded in oil company stock prices. Similarly, the impact of terrorist events on US soil are ameliorated through oil company strategy. A Preliminary Event Study Since this is a preliminary study to explore the relationship between oil company shareholder value and terrorist events such as 9/11. For this exploratory analysis the following tasks were performed: 1. Select a few oil companies and oil field service companies. A list is included in the Appendix. Collect their daily stock prices adjusted for dividends and stock splits for 2 years prior to and for 2 years following 9/11. Collect a broad based market index to control for market wide value movements for the same time period. 2. For each stock price and for the market index calculate daily returns as the natural logarithm of ratio the day's closing adjusted stock price (market index) to the previous day's price (market index). 3. Regress the stock price return as dependent variable versus the market index return as independent variable across the four year sample period. Compute regression residuals that measure daily abnormal returns, that is, returns not related to the market or other unspecified systematic influences. Compute the ratio of abnormal returns for each observation in the sample to the standard deviation of regression residuals, the series of standardized residuals. 4. Determine whether the absolute value of the standardized residuals are greater than 1.64, that is, they are statistically significant from zero at a 95 percent level of confidence, and record the observation dates of those that are. 5. Regress the stock price returns against the market returns for the sample period prior to 9/11. Regress the stock price returns against the market returns for the sample period after 9/11. Compare the regression slopes (Beta), a measure of the sensitivity of the stock price to market movements and thus a measure of relative market risk of the stock; compare the standard error of residuals as a measure of the average volatility of stock prices in the sample period. 6. Comment on the occurrence of significant abnormal returns on or about 9/11, as well as the relative differences between systematic risk and abnormal (relative to the market) risk. Daily closing prices, adjusted for stock splits and dividends, for the following was collected: Company/Index Ticker Symbol Industry Schlumberger SLB Oil Services Halliburton HAL Oil Services ExxonMobil XOM Integrated Oil Shell Trading and Transport SC Integrated Oil Amerada Hess AHC Refiner and marketer Petro Kazakhstan PKZ Oil producer Standard & Poors 500 SPX Broad-based market index Results of the performing the above tasks may be summarized in the following table. All data is publicly available on finance.yahoo.com. Notes: 1. Ticker is stock exchange symbol for sample company. 2. Beta is the regression slope term; SEE is the standard error of regression error in percentage/day. 3. AR is the sum of abnormal returns immediately following 9/11 until there are no statistically significant residuals; for Duration in number of days. 4. Pre-9/11 sample days extend from 26 October 1998 through 10 September 2001; Post-9/11 sample days extend from 17 September 2001 through 7 May 2004. Stock prices and market index are adjusted for stock splits, dividends and other adjustments as of the close of each day. Summary Comments The above results are highly preliminary and exploratory in nature. It appears that the following holds for these oil industry participants: - Market related risk increases after 9/11. This would mean that the cost of capital for these companies would be higher after 9/11 than before on average. Higher cost of capital can also imply that investment would be curtailed, since investors require more compensation for the risk they perceive for each dollar they contribute to the capital of a firm. - Company risk drops or remains the same after 9/11. Except for HAL, risks not due to systematic or market influences seem stable or are even lower after 9/11. This might mean that investors view these firms as able to manage post-9/11 risks after the fact even better than before this event. - Some companies gain in abnormal returns after 9/11. Both HAL and AHC loose significant amounts of market capital in the first few weeks after 9/11. Other companies actually recover and gain during this period. Hopefully a non-recurring event, 9/11 does appear to have significantly affected the volatility of some oil industry companies. Not only is the volatility attributable to company specific actions (the standard deviation of abnormal or non-market related returns) lower, but the systematic risk of owning these stocks is higher. Overall, expected returns are higher than average because of 9/11 for these companies. However, due to the disposition of company assets, strategies and tactics, some companies are experiencing lower company-specific volatility. All companies are affected immediately after the event itself. Future research will expand the sample, and infer drivers of risk. References Abadie, A., and J. Gardeazabal. The Economic Costs of Conflict: A Case-Control Study for the Basque Country. National Bureau of Economic Research, working paper 8478, September 2001. Cummins, J. and C. Lewis. Catastrophic Events, Parameter Uncertainty and the Breakdown of Implicit Long-term Contracting in the Insurance Market: The Case of Terrorism Insurance. Wharton Financial Institutions Center, working paper 02-40, July 30, 2002. Government Accounting Office. Terrorism Insurance: The Effects of the Terrorism Risk Insurance Act of 2002. Testimony before the Committee on Banking, Housing and Urban Affairs, United State Senate, in a Statement of Richard J. Hillman, Director, Financial Markets and Community Investment, GAO, May 18, 2004.

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: The purpose of this paper is to investigate the interrelation between Israeli Law and the socio-political status of the Arab-Palestinian Minority in the period between the "Land Day" (1976) and the "October events" (2000).

In the first three decades since the creation of Israel, the mode of inter-communal relationship between Arabs and Jews in Israel was that of a "control" system (Lustick, 1980). The paper explores the involvement of the Israeli Law in the dynamics that have occurred in this relationship, namely, its movement to a system termed by sociologist Sami Smooha "ethnic democracy" (Smooha, 1990).

My main argument is that several legal developments helped strengthen two socio-political processes. First, Law contributed to the appearance of more liberal aspects in the Israeli reality (in Israel proper, namely, within the green-line). Secondly, certain legal developments eroded important mechanisms that used to stabilize the control policy and thus pushed for a new and more moderate equilibrium. The main purpose of the paper is to analyze Law's contribution to this erosion of the "control" system.

An important caveat is in need here. The Arab minority status has improved, but it is far from being enviable. A more comprehensive analysis thus demands to unfold, simultaneously, the darker side of the Israeli Law in this context.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: In Xenophon’s Anabasis V.7, Xenophon relates a speech to the army in which he defends himself from charges that he has misused his command authority. One of the charges, which he details in the next chapter, is that he mistreated a soldier by striking him. This was a serious accusation; to strike a fellow Greek was an unseemly act more appropriate to slaves than to free men. This paper will consider the implications of this action, and Xenophon’s defense, in the light of contrasting evidence for how Greeks properly governed free men versus slaves. In Herodotus 4.3 a Scythian slave revolt is put down with whips rather than weapons, an act intended to belittle the slaves rather than to defeat a worthy adversary. In Plutarch’s Life of Lysander, the Spartan commander berates a fellow Spartan, who struck an Athenian, for “not knowing how to govern free men.” The dichotomy between commanding free men and mastering slaves strikes to the heart of Xenophon’s understanding of discipline, and the virtue it imparts to a commander.

This becomes problematic for Xenophon, who later sided with Sparta in the wars with Thebes, and opposed the Theban actions to free the Messenian Greeks and to reestablish their political center on the Peloponnesus. Xenophon, in particular, fails to grant a proper place to Epaminondas, the Theban commander, omitting him from the Hellenika until the end. The virtue that Xenophon claims in the Anabasis is conditioned by certain premises that do not extend to the Spartan failure to recognize the free status that properly belongs to the Messenians. This paper will consider these contrasting strains, and examine more closely the nature of the defense that Xenophon mounts.

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: The past decade has witnessed an unprecedented growth in the number of women placed under some form of correctional sanction. More women are placed on probation or incarcerated in local, state, and federal institutions today than at any other time in history. Some researchers suggest that this increase is a byproduct of contemporary, sex neutral, sentencing decisions; that is, women who had previously been given more lenient sentences than their male counterparts are now receiving similar or harsher punishments. Others contend that preferential treatment of women has not disappeared completely, but is instead reserved for certain kinds of women offenders. This study, which attempts to address the inconsistencies in the extant literature, examines the intersectionalities of offender sex, race, and ethnicity in explaining sentencing outcomes.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: What accounts for the very different roles women have played in different countries in the ongoing wars in the Horn of Africa? The hypothesis of this paper is that the political elite (who have been men) have, on the basis of their own political ideologies, decided the extent to which women would participate in war and how. These elite are rebel leaders or government leaders, who have almost without exception come to power through military violence.