Do Fines Affect Financial Companies: Part III The Graph-ening
OK, now that I'm done deleting the dozens of duplicated Kim Kardashian posts I made due to a bug in LinkedIn, let's get back to looking at some, er, fun stuff. If by "fun" you and I agree that we mean data analytics on financial company fines and stock prices. Oh, and Python modules matplotlib and pandas, a lot of matplotlib and pandas.
I won't bury the lede. Heck, it's the cover photo for this post. Anyway, here's the, as it were, money shot:
What you are looking at is the stock performance of 80 financial companies versus their total fines over the period January 2010 to July 2012. I also limited to fines over $10 million because it's a good cutoff--there's not much to say about a $5,000 fine versus a $50,000,000--and I got tired of sticking the data into spreadsheets.
The little green arrows are the stock going up. The red ones are stock going down. (Can we pause to look at them? It took me an hour to figure out how to code, and honestly I was surprised I got it that fast. Do you want to see the code? No? Really?)
The dotted line is the performance of S&P 500 over the same time period for reference. I don't know what that tells you, but it is probably something someone would ask me for and it looks cool.
Here's the big movers in table form. First up are the big money gains. The ones that you would buy if you had a time traveling Delorean.
Next up, we have the biggest fines versus the stock performance. There's one loser in here, Deutsche Bank, but if you had bought any of the others when you went back to the past with Marty McFly you would still have made money. (Perhaps Deutsche Bank made other bad decisions? Um...)
To recap, in previous posts I looked at the effects of regulatory fines, settlements, penalties, and nose pokes on financial companies. We largely came up the following conclusion: fines, shmines.
Those posts are here:
Adding in this additional information about long term stock performance, we have a slightly more mixed picture: some of the data points are red triangles. But on the whole, there's more mint flavored than cherry pixels, and there's no statistical correlation between fine amount and stock performance.
To sum up our findings to date: Do fines affect the financial companies? Yes, if you are thinking about negative press. Not so much if you are thinking about revenue or stockholder value.
Which do you think matters more? What's your view on this data? Any other analysis you'd like me to run? I've got my Python-mobile idling away on my task bar.