Movers and Shakers: Stock Market Response to Induced Seismicity in Oil and Gas Business
Round 1
Reviewer 1 Report
The topic is interesting and the authors have highlighted the originality and contributions of this paper. I suggest that the authors can revise and improve the manuscript again in order to meet the standard of Energies.
- Lines 50-68. The authors point out that induced seismicity affects the expected discounted cash flows and the valuation of a firm's stock. Accordingly, I expect that this effect would be a long-term effect rather than a short-term effect. Can the authors explain why this effect only influence the stock return in five days?
- Lines 134-135. I just curious about why the authors use "intra-day" returns to measure abnormal returns. Are overnight returns meaningless?
- Lines 252-257. The authors should define "significant from an economic pint of view".
Author Response
Reviewer ‘1’
The topic is interesting and the authors have highlighted the originality and contributions of this paper. I suggest that the authors can revise and improve the manuscript again in order to meet the standard of Energies.
- Lines 50-68. The authors point out that induced seismicity affects the expected discounted cash flows and the valuation of a firm's stock. Accordingly, I expect that this effect would be a long-term effect rather than a short-term effect. Can the authors explain why this effect only influence the stock return in five days?
- Lines 134-135. I just curious about why the authors use "intra-day" returns to measure abnormal returns. Are overnight returns meaningless?
- Lines 252-257. The authors should define "significant from an economic pint of view".
Our response
Thank you very much for reviewing the revised manuscript and for providing suggestions and comments.
Ad 1
Thanks for raising this issue. Reviewer is correct about this. Seismicity will affect net cash flows etc. over the long-term. However, financial investors immediately respond to news about the firm and its activities and can adjust their appreciation, which might translate into abnormal returns. We do clarify this in the text.
Ad 2
This is the convention in the literature and relates to the fact that markets are ‘open’ during limited hours. What happens overnight is reflected in opening price.
Ad 3
We now see that using the word significant in this context might cause confusion. We change into ‘just marginally relevant economic effect’.
Reviewer 2 Report
Thank you for the opportunity to review this manuscript again. I think the current revised version of the article is much better written. So, I have only two minor comments on the paper sent for review.
Comment 1: Findings for some of the results presented in the tables are very sparse, especially for Table 4.
Comment 2: It is also worth adding 1-2 sentences about the novelty of the article. Admittedly, the authors reported that "These novel findings complement existing insights ..." (Lines 376-379). However, it is worth adding more details on what these complement existing insights consist in.
Author Response
Reviewer ‘2’
Thank you for the opportunity to review this manuscript again. I think the current revised version of the article is much better written. So, I have only two minor comments on the paper sent for review.
Comment 1: Findings for some of the results presented in the tables are very sparse, especially for Table 4.
Comment 2: It is also worth adding 1-2 sentences about the novelty of the article. Admittedly, the authors reported that "These novel findings complement existing insights ..." (Lines 376-379). However, it is worth adding more details on what these complement existing insights consist in.
Our response
We very much appreciate you took another critical and constructive look at the manuscript.
Ad 1
We describe more detail regarding the results in Table 4.
Ad 2
We provide more details about the novelty of our study. In particular, the fact that we systematically investigate a very large number of events (i.e. induced seismic activity).
This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.
Round 1
Reviewer 1 Report
Please correct the following items:
1- In line 93 please explain who is suggesting (Grigoli et al)?
2- In line 125- please explain Eit
3- In line 238- (CAAR) is cumulative average abnormal returns , please correct it
4- In line 320, Please insert author's name and keep reference number in bracket ,
Reviewer 2 Report
General comments
The author shows good understanding of the importance of the selected issue. In addition, I think the paper has taken a thorough empirical econometric approach.
However, the authors should address some minor comments/suggestions.
Minor comments
/1/ Introduction. The authors should include previous studies that also focus on oil and gas companies. See, for example,
-2017. Oil price shocks and stock returns of oil and gas corporations. By EM Diaz, F Perez de Gracia. Finance Research Letters 20, 75-80
- 2017. Oil price shocks, policy uncertainty, and stock returns of oil and gas corporations. By W Kang, F Perez de Gracia, RA Ratti. Journal of International Money and Finance 70, 344-359
/2/ Dataset. How was the sample period chosen?
Reviewer 3 Report
Please refer to the attached file.
Comments for author File: 
Comments.pdf
Reviewer 4 Report
Thank you for the opportunity to review this paper. The subject matter of the paper is undoubtedly original and worth exploring. Overall, I find this manuscript interesting, but in need of a few corrections as outlined in the comments below.
Comment 1: The authors have combined 2 sections (introduction and literature review) making section 1 a bit chaotic. The introduction should indicate the research subject, the current state of knowledge on the subject, the purpose of the paper, the research gap and the structure of the paper. The literature review should be separate from this, as here we indicate how the literature relates to the topic under study and critically analyse the literature. Here, however, everything is mixed. This makes it unclear where is the literature review and where is the current state of research on the topic. It also causes the presented research gap (lines 90-103) to merge with the whole section and the reader has difficulty in determining what research gap is being filled. In addition, the authors have also not indicated the structure of the paper.
Comment 2: I advise avoiding reference strings when citing literature. An example is line 61, where the authors refer in one sentence to 5 references without explaining what these publications are about.
Comment 3: Lines 207-208, i.e. "The data and stock market information for the companies and the induced seismicity 207 is available at https://doi.org/10.34894/QWQ8SN" should rather be where the authors write where the data used for the study comes from, i.e. after line 188. As it stands, the sentence in lines 207-208 seems disconnected from the text above.
Comment 4: Conclusions to the results in the tables (in section 3) are sparse, e.g. to Tables 2, 4 and 6.
Comment 5: There is a complete lack of a conclusion, a section that would indicate what are the conclusions of the paper, what is the novelty to the literature of this study, what are the limitations of the research. This is a huge shortcoming of this work.
Comment 6: minor editorial errors. For example, the text in the article is scattered, e.g. table 2 is on page 7, although the space left on page 6 is sufficient for the table to fit.
Comment 7: The references are mostly old. They should be mostly publications from the last 3-5 years.
