e-journal

Effects of election results on stock price performance:evidence from 1980 to 2008

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Purpose – The authors aim to analyze whether the results of the 1980 to 2008 US presidential
elections influence the stock market performance of eight industries and they seek to examine factors
that are expected to affect firms’ stock returns around these elections. Their empirical analysis reflects
firms’ exposure to government policies in two ways.
Design/methodology/approach – First, to determine whether investors presume any Democratic
or Republican favoritism towards or biases against certain industries, the authors perform an event study
for each of the eight industries around the eight elections. Second, the authors include the firms’ marginal
tax rate as proxy for the firms’ exposure to uncertainty about fiscal policy in a regression analysis.
Findings – The authors do not find a consistent pattern in industry returns when comparing the effect
of Democratic vs Republican victories. However, the extent of the reaction differs among industries. The
victory of a Democratic candidate rather negatively influences overall stock returns, while the results are
rather mixed for Republican victories. A change in presidency from either a Democratic to a Republican
candidate or vice versa causes stronger stock market effects than re-election or the election of a president
from the same party. The authors also find that the firms’ marginal tax rate is positively correlated with
abnormal stock price returns around the election day.
Originality/value – The results are relevant for academics, investors and policy makers alike
because they provide insight on the question whether stock market participants respond to expected
changes in policy making as a result of presidential elections.

Keywords Partisanship, Sector performance, Political economics, Presidential elections, Economics,Elections

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Availability

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Detaylı Bilgi

Serinin Başlığı

Managerial Finance

Çağrı Numarası

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Yayıncı

: Emerald Group., 2013

Karşılaştırma

Managerial Finance Vol. 39 No. 8, 2013 pp. 714-736

Dil

English

ISBN/ISSN

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Sınıflandırma

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İçerik Tipi

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Media Tipi

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Taşıyıcı Tipi

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Sürüm

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Konu

EKONOMI

Özel Detaylı Bilgi

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Sorumluluk Beyanı

Asmawati/Syahrial

Diğer Sürüm/İlişkili

Dosya Eki

Yorumlar

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