Effect of Terrorism on Stock Returns

This study aims to investigate the impact of two recent attacks, namely Pulwama and Balakot Airstrike on KSE-100 index. The study used an event study methodology and Market model to analyze the data. A sample of the top 100 companies is used in this study. The study used data from the year 2018 to 2019. Two variables are used in this study that is terrorism and stock return. Terrorism is used as an independent variable and stock returns are used as a dependent variable. The findings of this paper suggest that the selected events do not affect the stock returns of the KSE-100 index. To encourage and motivate investors both domestically and internationally the governance system in the country should be fair and transparent to increase the morale of investors.