The financial performance of aircraft manufacturers during world war II: the vicissitudes of war

Controversy has long surrounded the role and profitability of US defense contractors. From a financial perspective the question becomes whether defense contractors earn greater profits and investor returns than other companies during military conflicts. We explore this question by examining the accounting profitability and investor returns of US aircraft manufacturers before, during, and after World War II and compare them to a sample of non-defense firms. We also examine the reactions of aircraft stock prices to important political and military events of the time. We find that (1) aircraft stocks exhibited positive abnormal returns around events associated with defense buildups and outbreaks of hostile action and negative returns around events signaling an end to hostilities, (2) the company’s accounting returns improved during the war but these higher accounting returns did not translate into higher stock returns for the shareholders, and (3) investors could have earned higher stock returns had they switched out of aircraft stocks after Pearl Harbor and reinvested the proceeds in the overall market.     

Reviews

Douglas S. Derrer, We Are All the Target: A Handbook of Terrorism Avoidance and Hostage Survival. Annapolis, MD: US Naval Institute Press, 1992. Pp. x+135, notes, index. $14.95. ISBN 01–55750–150–5

Ian Knight, Zulu: Isandlwana and Rorke's Drift, 22–23 January 1879. London: Windrow & Greene, 1992. Pp.136, 150 illus., incl 8 colour plates, maps, biblio. £35. ISBN 1–872004–23–7

Ian Knight, By the Orders of the Great White Queen: Campaigning in Zululand through the Eyes of the British Soldiers, 1879. London: Greenhill Books and Novato: Presidio Press, 1992. Pp. 272, 17 illus., 1 map. £18.95. ISBN 1–85367–122–3

Manfried Rauchensteiner and Erwin A. Schmidl (eds.), Formen des Krieges: vom Mittelalter zum ‘Low‐intensity’ Conflict’. Graz : Verlag Styria, 1991. Pp.208. DM35. ISBN 3–22–12139–7

Harold J. Kearsley, Maritime Power and the Twenty‐First Century. Dartmouth: Dartmouth Publishing Company, Limited, 1992. Pp.xv + 203, 13 diagrams, index. £32.50. ISBN 1–85521–288–9     

‘Today we shall drink blood’: internal unrest in Nigeria

Despite some tentative internal peace agreements, Nigeria continues to face violence from multiple groups. This violence feeds upon itself, with segments of the population being mobilized both for self defense and for pressing their ideological and practical goals. These multiple sources of violence, which the Nigerian government appears unable to control to any significant degree, have a long term corrosive effect on the country's internal stability. There are few reasons to be sanguine as to any rapid changes to the level of overall violence or the relative number of armed groups, although their specific identities may shift. Nigeria represents a good case study of a country in which relatively low but persistent violence by a multiplicity of groups can have major impacts on internal security.     

The missing dimension: IDF special operations forces and strategy in the Second Lebanon War

In the course of the 2006 Lebanon War the Israel Defense Forces (IDF) employed special operations forces (SOF) for raids against Hizb'allah's command and control structure. This article argues that a faulty conceptualization of the value of special operations and misguided expectations determined by the new IDF concept of operations impacted adversely on the employment of SOF for this kind of operations. Both these elements contributed in turn to substantially degrade SOF performance in the context of the war.     

A lost work of El Lobo: Lieutenant-Colonel Charles T.R. Bohannan's unpublished study of guerrilla warfare and counterinsurgency in the Philippines, 1899–1955

Charles Ted Rutledge Bohannan (1914–1982) became an integral agent of US counterinsurgency operations during the early Cold War, contributing to both the success of the COIN effort to defeat the communist Huk insurgents in the Philippines and the stalled COIN efforts in Vietnam. In the early 1960s, he wrote a short and compact analysis of the US and Filipino experience of guerrilla warfare, from the Philippine–American war until the defeat of the Huk Rebellion. It was never published. Reprinted here, Bohannan's analysis of lessons learned makes a substantial contribution to the history of American ideas of unconventional warfare by an expert who contributed these lessons to the successful defeat of an insurgency in South East Asia.     

Building A New Luftwaffe: The United States Air Force and Bundeswehr Planning for Rearmament, 1950–60

Rearming Germany was a long and complicated process. It was especially difficult to create a new German air force. The army generals who dominated the Bundeswehr cadre did not even want an air force but rather a small arm air corps. Moreover, Adenauer's defense staff failed to adequately budget or plan for a new air force. As rearmament began, US Air Force leaders, working closely with the small Luftwaffe staff in West Germany's shadow Defense Ministry, basically took charge of the process to ensure that the Germans built a new Luftwaffe on the American model – a large, multipurpose force organized as an independent service and fully integrated into NATO. The first Bundesluftwaffe commanders allied themselves to the Americans, often in opposition to their army comrades, to overcome the political problems caused by Adenauer's poor defense planning and create a modern air force on American lines.     

Stalin's Conception of Maritime Power: Revelations from the Russian Archives

Through unprecedented access to archival documents, the author places Soviet Premier Joseph Stalin's decisions regarding the navy in the context of a national economy in ruins, bureaucratic infighting, and Stalin's own unique understanding of geopolitics and naval strategy. These documents illustrate the decidedly defensive character of Stalin's maritime conception, as it reveals the Kremlin leader's strong disposition against attempts to ‘mimic the Americans’ and pursue an ocean-going fleet. The author also discusses Stalin's lessons from the Korean War and the impact of these lessons on the subsequent development of the Soviet fleet. Finally, this study offers insights for students of asymmetric warfare, as it explores the challenges and dilemmas that confront relatively limited powers within intense rivalries.     

‘Mowing the Grass’: Israel’sStrategy for Protracted Intractable Conflict

‘Mowing the Grass’, Israel’s strategy in the twenty-first century against hostile non-state groups, reflects the assumption that Israel finds itself in a protracted intractable conflict. The use of force in such a conflict is not intended to attain impossible political goals, but a strategy of attrition designed primarily to debilitate the enemy capabilities. Only after showing much restraint in its military responses does Israel act forcefully to destroy the capabilities of its foes, hoping that occasional large-scale operations also have a temporary deterrent effect in order to create periods of quiet along its borders. The Israeli approach is substantively different from the current Western strategic thinking on dealing with non-state military challenges.     

Bedeviled by a Paradox: Nitze,Bundy, and an Incipient Nuclear Norm

ABSTRACT

This article explores how two influential American policy makers—Paul Nitze and McGeorge Bundy—wrestled with the idea of a norm against the use of nuclear weapons. Existing scholarship has overlooked how both Bundy and Nitze came to understand the idea of nuclear non-use, especially related to the credibility of threats to use nuclear weapons. Using documentary evidence from their personal papers, this article illuminates the thinking of Bundy and Nitze, finding that both engaged with the idea of a norm of non-use of nuclear weapons in their strategic writing and thought.     

海上维权斗争舆论战对策思考

舆论战作为信息时代一种独立而重要的作战样式,是一种渗透力、攻击力、威慑力很强的特殊武器,是海上维权斗争行动的重要组成部分.文章对开展海上雏权斗争舆论战的紧迫性进行了分析,归纳总结了海上维权斗争舆论战的特点,探索了开展海上维权斗争舆论战的对策.