Graduation Year

2018

Date of Submission

4-2018

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Eric Hughson

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2018 Geno A Quaid

Abstract

This paper examines the effect on incumbent firms of industries which Amazon.com, Inc. enters. Using event study methodology, this paper tests the returns for incumbent firms on the day Amazon announces entrance into their industry. The paper studies the effects on two portfolios for each industry, a market capitalization weighted and an equally weighted. Each portfolio’s expected return is computed using the market model and then compared to actual returns to find the abnormal return. The results are mixed. Five industry portfolios have significant 1 – day abnormal returns and 2 – day CAR while the six other industries show no significance in either metric. The results prompt a discussion and logic? behind the markets response to Amazon entering new markets. The leading explanation of the industries that saw effects is the time in which Amazon entered.

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