Geopolitical Risk and Defence Stocks: An empirical analysis of defence stock market performance
(2024) NEKN02 20241Department of Economics
- Abstract
- This study aims to investigate the market performance of defence stocks, with a focus on geopolitical risk. The recent developments related to geopolitical risk, the potential changes in the market sentiment towards defence firms in connection to these and the little examination of the relationship between defence stock market performance and geopolitical risk open the possibility for contributing a new perspective on defence stocks. This study therefore analyses defence stock market performance in the U.S. and European markets during 2010–2023, utilising pooled panel data regression models estimated with OLS and incorporating a geopolitical risk index as well as different dummy variables to study the effect of changes in geopolitical... (More)
- This study aims to investigate the market performance of defence stocks, with a focus on geopolitical risk. The recent developments related to geopolitical risk, the potential changes in the market sentiment towards defence firms in connection to these and the little examination of the relationship between defence stock market performance and geopolitical risk open the possibility for contributing a new perspective on defence stocks. This study therefore analyses defence stock market performance in the U.S. and European markets during 2010–2023, utilising pooled panel data regression models estimated with OLS and incorporating a geopolitical risk index as well as different dummy variables to study the effect of changes in geopolitical risk. Our findings show that defence firms perform worse than control firms in general and that increased geopolitical risk affects stock markets negatively. However, defence firms are found to be less negatively or even positively affected by increased geopolitical risk. Defence stock performance in European markets is seen to be positively affected by increased geopolitical risk or the event of war. The performance of American defence stocks is only shown to be less negatively affected by increased geopolitical risk than that of the control firms. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9156502
- author
- Bromée, Emma LU and Doek, Jochem LU
- supervisor
- organization
- course
- NEKN02 20241
- year
- 2024
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- defence stocks, geopolitical risk, market performance
- language
- English
- id
- 9156502
- date added to LUP
- 2024-08-12 15:55:12
- date last changed
- 2024-08-12 15:55:12
@misc{9156502, abstract = {{This study aims to investigate the market performance of defence stocks, with a focus on geopolitical risk. The recent developments related to geopolitical risk, the potential changes in the market sentiment towards defence firms in connection to these and the little examination of the relationship between defence stock market performance and geopolitical risk open the possibility for contributing a new perspective on defence stocks. This study therefore analyses defence stock market performance in the U.S. and European markets during 2010–2023, utilising pooled panel data regression models estimated with OLS and incorporating a geopolitical risk index as well as different dummy variables to study the effect of changes in geopolitical risk. Our findings show that defence firms perform worse than control firms in general and that increased geopolitical risk affects stock markets negatively. However, defence firms are found to be less negatively or even positively affected by increased geopolitical risk. Defence stock performance in European markets is seen to be positively affected by increased geopolitical risk or the event of war. The performance of American defence stocks is only shown to be less negatively affected by increased geopolitical risk than that of the control firms.}}, author = {{Bromée, Emma and Doek, Jochem}}, language = {{eng}}, note = {{Student Paper}}, title = {{Geopolitical Risk and Defence Stocks: An empirical analysis of defence stock market performance}}, year = {{2024}}, }