Overreaction or Opportunity? An Event Study of Defense Sector Stocks Responding to Geopolitical Shocks

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dc.contributor.advisorKopanyi-Peuker, Anita
dc.contributor.authorStramrood, Mats
dc.date.issued2025-07-03
dc.description.abstractThis study aims to examine whether defense sector stocks overreact to geopolitical shocks, specifically focussing on the Russia-Ukraine war and the Israel-Gaza conflict. The research uses an event study methodology to calculate the Cumulative Average Abnormal Returns (CAAR) over multiple pre- and post event windows across three models. Consistent for both events and all three models, defense sector stocks show a steady increase in CAAR over the one-year post-event period. This pattern contradicts the overreaction hypothesis, which would predict an initial spike followed by a correction. To compare the findings for the defense sector, a control group of non-defense stocks is taken into consideration. For nondefense stocks, the results suggest that their cumulative average abnormal returns do not consistently deviate significantly from zero over time. The research concludes that defense sector stocks show drift over the one year post-event period, rather than a short term overreaction. Although the study is limited to a one year post-event horizon, the findings offer valuable insights into investor reactions to geopolitical shocks across defense and non-defense sector equities.
dc.identifier.urihttps://theses.ubn.ru.nl/handle/123456789/19208
dc.language.isoen
dc.thesis.facultyFaculteit der Managementwetenschappen
dc.thesis.specialisationspecialisations::Faculteit der Managementwetenschappen::Master Economics::Financial Economics
dc.thesis.studyprogrammestudyprogrammes::Faculteit der Managementwetenschappen::Master Economics
dc.thesis.typeMaster
dc.titleOverreaction or Opportunity? An Event Study of Defense Sector Stocks Responding to Geopolitical Shocks

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