Abstract

This project explores the impacts of four market developments in the air transportation, computer technology, theme park entertainment, and truck transportation industries on firm annualized returns and market structure. Analyzing such developments helps inform how to best react to current events of similar caliber as they begin to impact market structure and profitability. Previous literature studied such effects on intra-firm and inter-industry behavior but has so far lacked direct analysis of industry-wide impacts. Combining data from Compustat and NYU’s Stern School of Business, I employ regression discontinuity design to decompose the immediate and lagged impacts of critical events on annual stock close prices and annualized returns. The air transportation, computer technology, and theme park entertainment industries demonstrated an immediate decrease in annualized returns of 29.9, 57.5, and 3.8 percentage points respectively, while the truck transportation industry demonstrated a 17.6pp increase. Lagged effect analysis yielded consistent results with the initial regression and industry analysis, save the theme park transportation industry which saw a 5.06 percentage point increase in returns. All four industries experienced considerable increases in new entrants, bankruptcy, and mergers following critical events, with very few dominant players from the year of each critical event persisting until the present.

Keywords: transportation, entertainment, stock returns, profitability, merger, bankruptcy, computers, 1980, Great Stagnation

How to Cite:

Orpello-McCoy, B., (2024) “Planes, Trucks, and Ferris Wheels: Impacts of Market Developments on Industry Structure and Profitability”, UCL Journal of Economics 3(1). doi: https://doi.org/10.14324/111.444.2755-0877.1888