Open AccessMeasuring The Economic Effects Of Political Events: War And The U.S. Defense Industry
Author(s) -
James E. McDonald,
Walter Kendall
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v10i1.5963
Subject(s) - politics , stock (firearms) , stock market , stock price , economics , monetary economics , financial economics , business , political science , law , history , paleontology , context (archaeology) , archaeology , series (stratigraphy) , biology
The authors make use of the Cumulative Prediction Error (CPE) technique to examine the effects of political events in the stock market. The stock price behaviour of sixteen U.S. defense industry firms was examined before and after seventeen unforeseeable political events involving military force. The authors found that significantly positive effects on stock prices appear to occur as a result of military actions. The nature and use of the CPE technique is discussed.