The impact of US elections on US defense industry: firm-level evidence from 1996 to 2022

This study examines the relationship between the US political cycle and the revenues of US military manufacturing companies from 1996 to 2022. The research introduces a novel approach by utilizing data on military manufacturing companies’ revenues, diverging from the prevalent use of SIPRI data in the existing literature on military revenues. The primary challenge in collecting defense revenues is dual engagement namely the fact that most companies are engaged in both military and civilian production. This challenge is addressed through cross-referencing company data with patent information. Furthermore, to distinguish revenues stemming from military sales versus those from civilian and commercial sales, we exclusively select data from business lines directly involved in military production. Data has been collected for 103 US military manufacturing companies from 1996 to 2022. Consistent with existing literature, the empirical analysis demonstrates that in the year preceding executive election years, the growth rate of US defense revenues is lower compared to non-preceding executive election years. Conversely, in executive election years, the growth rate of defense revenues is higher compared to other years.