تقلب و بازارهای مالی: سقوط سهام معدن در سال 1997

The Vancouver Composite Index fell by over 25 percent in less than 6 weeks during spring 1997 as the junior mining sector collapsed. We argue that this market collapse was triggered by the failure of Bre-X Minerals when that company’s Indonesian claims, previously believed to contain the world’s largest gold deposit, were shown to be pure fraud. Our event study, based on market returns for the Vancouver Composite Index and for a portfolio of 59 gold stocks, shows the effects of the Bre-X scandal to be both sizeable and significant. There is also some evidence that smaller exploration companies were hardest hit.

While 1997 was a very good year for most major Canadian and U.S. stock market indices, it was a disastrous year for investors in Canadian junior mining stocks. The Composite Index of the Vancouver Stock Exchange, home to most smaller mining companies, collapsed in the spring of 1997 falling by more than 25 percent in less than 6 weeks. Interestingly, while this crash predated the major weakness in gold prices that set in later in 1997, its onset coincides precisely with the well-publicized failure of a mining company known as Bre-X. Bre-X rose from a minor penny stock to a company with a market cap of more than 6 billion Canadian dollars on the strength of a reputedly enormous gold deposit in Indonesia. It is hardly surprising that, when it became clear that the company’s claims were fraudulent, Bre-X stock plunged in value. What is more remarkable is the way that Bre-X seemed to carry the whole junior mining market with it. On March 20, 1997, just prior to the first reports that independent tests did not confirm Bre-X company claims, the Vancouver Composite Index stood at 1307.99. By May 5, 1997, when Strathcona Mining Services Ltd., an independent consulting firm hired to assess the veracity of Bre-X’s findings, issued its final report concluding that the Bre-X claims were a fraud “without precedent in mining history,” the index had fallen to 1003.53.1 In this paper, we address the impact of the Bre-X factor on a sample of 59 gold mining companies. These companies range from behemoths like Barrick Gold with numerous operating mines to smaller, junior companies, with no production, that are valued solely for the potential success of their exploration activities. We show that not only does news of the Bre-X fraud significantly lower excess returns across the board but also there is some evidence that the negative effects are higher for junior mining companies. We cannot be sure whether these market declines reflected a collapse of confidence in all exploration companies, fears that other junior companies were as fraudulent as Bre-X, forced selling to make good losses and/or margin calls on Bre-X holdings, or some combination of all these things. However, the massively negative impact is clear. The results show how important reputation and full disclosure can be to asset markets where prices are based on high-value, low-probability events.

During the spring of 1997, Bre-X’s failure destroyed nearly 6 billion Canadian dollars in paper wealth. However, the losses incurred by Bre-X shareholders proved to be just the tip of the iceberg. Our event study suggests that the Bre-X scandal triggered a collapse in confidence in the whole mining sector, with smaller, exploration-type companies being hit particularly badly. Perceptions, and sector valuations, plummeted almost overnight and financing possibilities dried up in the wake of the Bre-X fraud. The collapse of the junior mining stocks serves as a reminder that a whole sector can be brought down by a single, precipitating event. Investor confidence is especially important in asset markets that rely heavily on uncertain future events. Fraud and misinformation in one instance leads investors to re-evaluate the quality of the information provided by similar firms. In markets where reputation plays a critical role in assessing the quality of information, such events often lead investors to assume the worst for the remaining firms as well.