Who Benefits in Times of Strife and Uncertainty?: A study of mining companies in the Democratic Republic of Congo

Abstract

In this thesis, we show that violence–escalating events lead to an increase in stock prices for mining companies holding concessions in the Democratic Republic of Congo (DRC). The increase in value is higher during the Second Congo War compared to its aftermath. We find little evidence that companies that are headquartered in high–corruption countries, present in tax havens, or operate in the gold industry experience a higher increase in company value. However, we find that unethical companies outperform ethical companies when exposed to violent events. Our results are consistent with the theory that resource war and violent conflicts generate benefits that seems to outweigh the cost of investing money in an unstable political economy.