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In the globalised world, sustainability of companies depends not only on financial attributes but also companies' contribution to the welfare of society (Onar, 2012). Sustainable development can be restricted by major accidents which occur in some hazardous industries. Almost every major accident may have negative influence on the sustainable development. It is clearly that accidents are threats to the sustainability of communities, and often to the environmental resources that those communities depend on. Business (including industry), as the important role of society community, has a responsibility toward the whole of society to engage actively in the sustainability arena (Connor & Dovers, 2004; Vaidogas & Juocevičius, 2008; Brent, Erck & Labuschagne, 2006). Corporate responsibility amounts to taking consideration conditions and effects that are systematically linked to corporate action (Kamppinen et al., 2008). And studies on corporate responsibility and sustainable society in recent years become a popular topic (Xia et al., 2008; Kuepfer & Papula, 2010; Gorenak & Bobek, 2010; Del Baldo, 2010). However, high level of industrial accident frequency exposes the lack of corporate responsibility, especially in the high-speed economic development in China.
Since 1978, China has undergone dramatic transformations from a centrally planned economy to a market economy. Along with this process, there have been significant changes in the geography of China's industrial activities (Lu & Tao, 2009). In recent years, China's industrial growth has been extremely rapid. However, with the acceleration of industrial growth, the industrial accident frequency is still keeping at a high level. In China, every year the average number of accidents is 800,000, more than 130,000 people are dead. And the economic cost of accidents could top 25 billion Yuan, which are equivalent to 2% of GDP. Moreover, the cost of disasters extends beyond their immediate impact, and affects the value of companies (Knight & Pretty, 1997). The conflicts between economic growth and serious social issues make the studies on China's capital market and industrial accident exciting and challenging.
Many scholars (see. for example Tietenberg, Cohen & Santhakumar) have suggested that the threat of a severe market penalty can complement government regulation by providing incentives to comply with safety and environment standards and /or to innovate in order to prevent accidents (Capelle & Laguna, 2010). The US financial crisis has underlined the fact that markets tend to be more dependent during the crisis than they are during the pre-crisis periods (Jayech & Zina, 2012). There are lots of studies about the factors which can cause the fluctuation of stock market. For example, Shi and Yu (2012) examine the direct impacts of pricing strategy on financial markets. Chao et al. (2011) study the impact of donations on stock market. In this study, we try to find out whether and how stock market responds to industrial accident. In particular, we analyze how it will be changed in different markets and company sizes. Section 2 presents relevant reviewed literatures on the impacts of accidents on stock market and the event study method is presented in section 3. Then, section 4 describes China’s 83 listed companies’ data and their analysis, and uses the event study method to calculate the abnormal return in order to discuss the outcomes. In the last section, we contain some conclusions.