Eastern Economic Journal

, Volume 44, Issue 2, pp 211–241 | Cite as

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

  • Stephen Ciccone
  • Fred R. Kaen
  • Huimin Li


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.


Korean war aircraft industry defense contracting wartime stock returns 


G10 N42 N22 



The authors thank the anonymous referees and seminar participants at the Eastern Economic Association annual conference and the Northeast Business and Economics Association annual conference for their helpful comments. Stephen Ciccone gratefully acknowledges support from the Peter T. Paul Financial Policy Center.


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Copyright information

© EEA 2016

Authors and Affiliations

  1. 1.Accounting and Finance Department, Paul College of Business and EconomicsUniversity of New HampshireDurhamUSA

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