Working Paper Article Version 1 This version is not peer-reviewed

Impact of Geopolitical Risk on the Information Technology, Communication Services & Consumer Staples Sectors of the S&P 500 Index

Version 1 : Received: 7 October 2021 / Approved: 8 October 2021 / Online: 8 October 2021 (09:34:45 CEST)

How to cite: Fossung, G.A.; Vovas, V.C.; Quoreshi, A. Impact of Geopolitical Risk on the Information Technology, Communication Services & Consumer Staples Sectors of the S&P 500 Index. Preprints 2021, 2021100132 Fossung, G.A.; Vovas, V.C.; Quoreshi, A. Impact of Geopolitical Risk on the Information Technology, Communication Services & Consumer Staples Sectors of the S&P 500 Index. Preprints 2021, 2021100132

Abstract

We investigate the effect of geopolitical risk on the returns of the Information Technology, Communication Services, and Consumer Staples sector firms within the S&P 500 index. We use the event study methodology and perform more than 17,000 regressions to provide empirical evidence at the sector level that geopolitical risk leads to different responses across these 3 sectors. The response of the Information Technology sector is negative for all event windows under study, except the one spanning 10 days prior to the geopolitical event and 10 days after. The Communication Services sector has positive returns as a result of geopolitical events for all event windows, except the one from the geopolitical event date and 5 days after. The Consumer Staples sector shows a negative impact on geopolitical risk for all event windows except the one from the geopolitical event date and 5 days after, demonstrating a negative correlation to the Communication Services sector.

Keywords

Geopolitical risk; Event study; S&P 500 index; Information Technology; Communication Services; Consumer Staples

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