Vol. 7 No. 2 (2019): Business & Management Studies: An International Journal


İsmail Çağrı ÖZCAN
Assist. Prof. Dr., Ankara Yıldırım Beyazıt University

Published 2019-06-26


  • European Union emission trading scheme, Stock market reactions, Event-study methodology, Airline industry.
  • Avrupa Birliği emisyon ticareti sistemi, Hisse senedi piyasası tepkisi, Olay analizi metodolojisi, Havayolu sektörü.

How to Cite

ÖZCAN, İsmail Çağrı. (2019). STOCK MARKET REACTIONS TO REGULATORY EVENTS ON EMISSION TRADING: EVIDENCE FROM THE EUROPEAN AIRLINE INDUSTRY. Business & Management Studies: An International Journal, 7(2), 1061–1075. https://doi.org/10.15295/bmij.v7i2.1104


The inclusion of international aviation emissions into the European Union Emission Trading Scheme starting from 2012 is expected to bring additional costs to flights having either origins or destinations at a European Union airport. In turn, this should bring new costs to airlines. The aim of this paper is to analyze how financial markets reacted to the official announcements on this regulatory change. Our findings, using an event-study methodology and employing a sample of 20 European airlines’ stocks, reveal that the stock markets tend not to take these regulatory changes into account in the valuation of the European airlines’ stocks. We also document that the magnitude of the reaction of low-cost airlines is not statistically significant than that of full-service network airlines’ reaction.


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