All Quiet on the Market Front : A stock market analysis of the Ukraine-Russia War 2022

Abstract

This thesis examines the stock market reaction to changes in the public's perception of the likelihood of a conflict in an approach to find evidence for the "war puzzle" theorem by Brune et al. (2015). We use time series regression analysis including interaction terms to measure the impact of the outbreak of wars. Our focus lies on the war between Ukraine and Russia in 2022. We also investigate the outbreak of the Syrian civil war in 2011 and the annexation of Crimea in 2014. We do not find supporting evidence for the theorem in our analysis. Our discussion presents several potential reasons for this, reaching from the relevance of the conflicts to prospect theory (Kahneman and Tversky (1979)).