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Beyond military sales: The market premium on dual-use R&D in the defence sector

Author

Listed:
  • Albori, Marco
  • Ferriani, Fabrizio
  • Ristuccia, Livia

Abstract

We examine how financial markets value defence firms’ R&D investments in the context of rising European military spending. Using data for listed European and US contractors, we relate equity valuation and expected earnings to R&D intensity and dual-use (civilian and military) activities. We find that higher R&D intensity is linked to stronger equity valuations, especially for firms with substantial dual-use exposure.

Suggested Citation

  • Albori, Marco & Ferriani, Fabrizio & Ristuccia, Livia, 2026. "Beyond military sales: The market premium on dual-use R&D in the defence sector," Economics Letters, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:ecolet:v:260:y:2026:i:c:s0165176526000145
    DOI: 10.1016/j.econlet.2026.112820
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    JEL classification:

    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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