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Short-term market impact of 2024 US President elections and Trump-Zelensky meeting in defence industry
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Orientador(es)
Resumo(s)
This study examines the short-term market effect of the US and European largest defence firms on
the 2024 US presidential election (November 5, 2024) and the Trump-Zelensky meeting
(February 28, 2025). By employing an event study methodology, our results show a positive and
statistically significant stock price impact for both events. The results for the 2024 US presidential
election are consistent with political business cycle theory. National elections in the arms-
producing country drive a growth in sales revenues for defence firms, which tend to be higher
when the Republican Party candidate wins the US elections. Our results also show the presence of
heterogeneous abnormal returns between US and European defence firms around the Trump-
Zelensky meeting, with European firms showing high and statistically significant positive
returns while US firms show non-significant returns. This result is explained by the failure of
security guarantees given by the US to the European countries and the awareness of the need for a
rapid increase in military spending for self-defence purposes in Europe. This meeting reinforced
the application of the principle of “Europe preference” in the acquisition of weapons. Finally, we
conclude that stock market responses are reinforced or mitigated by firm-specific characteristics.
Descrição
Palavras-chave
Abnormal returns Defence industry Elections Geopolitical events Event study . Faculdade de Ciências Sociais
Contexto Educativo
Citação
Martins, A. M., Albuquerque, B., Sardinha, L., & Moutinho, N. (2025). Short-Term market impact of 2024 US President elections and Trump-Zelensky meeting in defence industry. The North American Journal of Economics and Finance, 102569.
Editora
Elsevier BV