Expert Commentary

Markets starting to shrug off mass shootings

Mass shootings in the United States used to hurt the stock value of publicly listed gun makers. That effect has worn off, however, as the violence has become customary.


The United States has about 5 percent of the world’s population, but 31 percent of the mass shootings.

By some estimates, there are more guns in the hands of American civilians than there are people in the U.S. Americans are 10 times more likely to die from a gunshot wound than residents of any other developed country. And American gun manufacturers produced more than twice as many firearms in 2013 as they did in 2008, according to federal data.

Mass shootings like the one at Sandy Hook Elementary School in Newtown, Connecticut, in 2012 — when 20 children and six teachers were killed — are often followed by outrage and calls for stronger gun legislation. But anecdotal evidence suggests gun stores see shoppers splurge after such attacks; gun advocates, the thinking goes, are stocking up, fearing impending regulations.

That fear may explain why gun manufacturers more than doubled production while Barack Obama, who called for tougher gun controls, was president. Since Donald Trump won the 2016 presidential election, however, these firms have lost value. Trump has said he opposes tighter regulations; the absence of a threat seems to mean fewer people feel the need to stock up.

While much has been written on how communities are impacted by mass shootings and the mental state of the perpetrators, little attention has focused on how these tragedies impact firearms manufacturers.

An academic study worth reading: “Traders, Guns, and Money: The Effects of Mass Shootings on Stock Prices of Firearm Manufacturers in the U.S.,” in PLoS One, 2017.

Study summary: Anandasivam Gopal and Brad Greenwood, business professors at the University of Maryland and Temple University, respectively, investigate if mass shootings (defined as random shootings of civilians that result in four or more fatalities) impact the stock prices of gun makers.

Only two firearm manufacturers in the U.S. are publicly traded — Sturm, Ruger, and Co. (Ruger) and Smith and Wesson (which rebranded as American Outdoor Brands in 2017). Gopal and Greenwood contrast these firms’ historical stock values with data on 93 shootings between January 2009 and September 2013 compiled by Mayors Against Illegal Guns, an advocacy group that tracks the violence. 

The authors also probe other aspects of mass shootings to determine if there is any association between the firms’ equity values and the number of children killed or the ideological leanings of the community where a shooting occurs.

Key takeaways:

  • Starting a day after a mass shooting, the two manufacturers’ stock prices fall roughly 0.224 to 0.495 percent per day for up to 10 days. The authors call this a “clearly identifiable economic impact,” and note that on other days, when there has not been a mass shooting, the values of these firms tend to follow trends in the broader stock market.
  • This drop in stock prices translates into a decline in market capitalization after two days of $5 million at Smith and Wesson and $6.7 million at Ruger.
  • This negative effect appears to be strongest on the second day after a mass shooting.
  • This effect attenuated during the four-plus years of the study: “There is increasingly [a] lack of response to these events as markets appear to learn that no regulatory action is likely to be forthcoming.” This result suggests “mass shootings have indeed become the ‘new normal,’ and that there no longer appears to be any expectation of regulatory intervention associated with them, although the effect on gun purchases remains strong.”
  • The authors find no significant effect if children are among the victims.
  • They do find a significant effect when the total number of victims is higher.
  • The manufacturers’ stocks take a bigger hit when a handgun is involved, compared to a rifle. This suggests that concerns about regulations focus mostly on handguns.
  • The authors find no significant effect based on which state the mass shooting occurred in.

Helpful resources:

According to the Centers for Disease Control and Prevention (CDC), the U.S. saw 33,599 firearm deaths in 2014, the latest year for which data are available. The death rate is 10.5 per 100,000 people. The CDC also publishes figures by state, which indicate Louisiana residents have the highest chance of being killed by a firearm and Hawaiians the lowest.

The Small Arms Survey at the Graduate Institute of International and Development Studies in Geneva, Switzerland, is one of the most authoritative sources on weapons around the world. According to the organization’s most up-to-date data, Americans have the highest rate of civilian gun ownership anywhere, at 89 guns for every 100 people (some have more than one gun and many have none) followed by Yemen at 55 per 100 people. A 2013 Small Arms Survey working paper discusses the firearms industry in the U.S., including insights into the resale market.

The National Rifle Association (NRA) lobbies against gun-control measures, supporting politicians who “expand the recognition of the constitutionally protected right to self-defense.”

The Bureau of Alcohol, Tobacco and Firearms (ATF) is the federal law enforcement body that investigates the illegal use and trafficking of firearms. The Bureau publishes an annual statistical update including data on firearm manufacturing, imports and exports.

The Gun Violence Archive is a nonprofit that tracks shootings in the U.S.

Other research:

This 2016 study by a criminologist at the University of Alabama found that while the U.S. has about 5 percent of the world’s population, it has 31 percent of the world’s mass shootings.

This 2016 paper in the American Journal of Medicine found Americans 10 times more likely to be killed by a gun than residents of other developed countries.

This 2012 paper in the Academy of Management Journal discusses how the stigma associated with global arms manufacturers increases when their putative victims are seen as more innocent (such as children).

Journalist’s Resource has written about research on right-to-carry lawsbackground checks and mental illness, the online gun marketshooting spreescarrying weapons on campus and analyses of existing gun-control legislation.

A controversial 2016 study found that background checks of gun buyers would dramatically lower the number of deaths from firearms in the U.S.

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