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Educational Programme
Final Grade
Year of Graduation
Artem Knyazev
Influence of News about Hostilities on Performance of Defense Industry Companies' Stocks
Strategic Corporate Finance
(Master’s programme)
Defense industry – controversial from ethical point of view, but still profitable - is an integral part

of modern economy. According to researchers’ findings, this industry could provide one with

reliable returns at times when the rest of market is falling. Some investors do not invest in this

industry from ethical reasons, but such an approach just results in underpricing and therefore higher

returns on defense industry’ stocks.

This paper is dedicated to investigation of reaction of defense industry’ stocks on positive and

negative news from battleground. Sample of research consists of nine large defense contractors

from US and Europe. Period of the research includes three major conflicts (Iraqi war, Libyan war,

Syrian war) which took place during 2000-2018. From the one hand, positive and negative news

could be considered as an evidence of good and bad quality of company’s production

correspondingly. On another hand, positive news imply that

end of war is near, which is a bad sign for defense companies that create value from defense supply.

For the purposes of this research, we expect that positive news would result in positive reaction and

negative news would result in negative reaction.

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