The market’s response to contract award announcements: government versus corporate contracts

This paper examines the effects of contract award announcements on the stock returns of successful grantees. Contract awards are identified using Lexis/Nexis and classified according to whether the grantor is another corporation or government body. The government grantors are further classified according to the type of government entity granting the contract. Four subsamples emerge: federal (non-military), military, municipal, and foreign. The results suggest that contract awards granted by foreign governments are more lucrative than contract awards granted by corporations or American governmental bodies. This finding endures even after controlling for potentially confounding factors.