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What drives the market value of firms in the defense industry?
Author(s) -
CapelleBlancard Gunther,
Couderc Nicolas
Publication year - 2007
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/j.rfe.2007.02.001
Subject(s) - earnings , stock (firearms) , event study , terrorism , business , stock market , stock price , defense industry , value (mathematics) , monetary economics , economics , financial economics , accounting , management , mechanical engineering , history , paleontology , context (archaeology) , archaeology , horse , machine learning , series (stratigraphy) , computer science , engineering , biology
This article assesses the relative importance of different types of news in driving significant stock price changes in the defense industry. We implement a systematic event study with the 58 largest publicly listed companies in the defense industry, over the time period 1995–2005. We first identify, for each firm, the statistically significant abnormal returns over the time period. Then, we look for information releases likely to cause such stock price movements. Most of the key drivers in the defense industry are the same as in other industries (key role of formal earnings announcements and analysts’ recommendations) but we also identify some specific features, in particular the influence of geopolitical events and the relevance and frequency of bids and contracts on stock prices. Finally, we examine the impact of the September 11 terrorist attacks on defense firms.
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