Browsing by Author "Goncalves, Alvaro"

In the summer of 2014, the Portuguese were astonished to witness the downfall of a financial empire. The once untouchable Espírito Santo family led its financial group, and most importantly the Banco Espírito Santo (BES), an inescapable player in the Portuguese economy, into bankruptcy. Even more than a decade later, there are ongoing discussions and investigations of this case, primarily centered on extracting political and judicial implications of the resolution carried out by Banco de Portugal (BdP). The existing literature predominantly focuses on the governance practices of Banco Espírito Santo and its accounting principles, as well as providing detailed analysis regarding the financial structuring of the ensuing government intervention, the immediate costs of the bailout, and the respective burden for the Portuguese taxpayer. Additionally, journalists have been contributing to shed light on the BES collapse, by producing media content that makes it to the first pages of newspapers even today. In this thesis, I implemented an event study methodology to identify abnormal returns in the constituent stocks of the PSI Index resulting from BES-related news releases that don’t disclose new relevant information. The analysis yielded statistically significant negative cumulative abnormal returns for the window starting from five trading days before to five trading days following the publication of the articles, for each year from 2015 to 2024. These results uncovered a behavioral bias present in investors, highlighting a different way in which the BES collapse impacted the Portuguese stock market and hence the Portuguese economy.