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What drives the market value of firms in the defense industry?

Gunther Capelle-Blancard and Nicolas Couderc ()
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Nicolas Couderc: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: 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.

Keywords: Defense; Event study; GARCH (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (2)

Published in Review of Financial Economics, 2008, 17 (1), pp.14-32. ⟨10.1016/j.rfe.2007.02.001⟩

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Working Paper: What drives the market value of firms in the defense industry? (2006) Downloads
Working Paper: What drives the market value of firms in the defense industry? (2006) Downloads
Working Paper: What drives the market value of firms in the Defense industry? (2006) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00305380

DOI: 10.1016/j.rfe.2007.02.001

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