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The Fortunes of War and Aircraft Manufacturer Stock Returns: The Case of the Korean War

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Listed:
  • Stephen Ciccone

    (University of New Hampshire)

  • Fred R. Kaen

    (University of New Hampshire)

  • Huimin Li

    (University of New Hampshire)

Abstract

We examine the profitability of U.S. aircraft manufacturers, their stock returns over the sample period, and their stock reaction to important events during the Korean War. Aircraft stocks responded favorably to events implying a continuation of the war and negatively to events implying a cessation of hostilities. Furthermore, their accounting profits improved substantially relative to pre-war years and to the median of the largest 500 U.S. corporations. This increase may explain why annualized returns for aircraft firms were greater than the overall market during the war. However, these higher returns were not “excessive” based on the Carhart four-factor alpha.

Suggested Citation

  • Stephen Ciccone & Fred R. Kaen & Huimin Li, 2018. "The Fortunes of War and Aircraft Manufacturer Stock Returns: The Case of the Korean War," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(2), pages 211-241, April.
    • Handle: RePEc:pal:easeco:v:44:y:2018:i:2:d:10.1057_s41302-016-0077-7
    DOI: 10.1057/s41302-016-0077-7
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    References listed on IDEAS

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    Cited by:

    1. Pandey, Dharen Kumar & Lucey, Brian M. & Kumar, Satish, 2023. "Border disputes, conflicts, war, and financial markets research: A systematic review," Research in International Business and Finance, Elsevier, vol. 65(C).

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