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Political Preferences and Stock Markets

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Political Preferences and Stock Markets. / Nguyen, Phuc Lam Thy; Alsakka, Rasha; Mantovan, Noemi .
In: International Review of Financial Analysis, Vol. 90, 102910, 11.2023.

Research output: Contribution to journal › Article › peer-review

HarvardHarvard

Nguyen, PLT, Alsakka, R & Mantovan, N 2023, 'Political Preferences and Stock Markets', International Review of Financial Analysis, vol. 90, 102910. https://doi.org/10.1016/j.irfa.2023.102910

APA

Nguyen, P. L. T., Alsakka, R., & Mantovan, N. (2023). Political Preferences and Stock Markets. International Review of Financial Analysis, 90, Article 102910. https://doi.org/10.1016/j.irfa.2023.102910

CBE

Nguyen PLT, Alsakka R, Mantovan N. 2023. Political Preferences and Stock Markets. International Review of Financial Analysis. 90:Article 102910. https://doi.org/10.1016/j.irfa.2023.102910

MLA

Nguyen, Phuc Lam Thy, Rasha Alsakka and Noemi Mantovan. "Political Preferences and Stock Markets". International Review of Financial Analysis. 2023. 90. https://doi.org/10.1016/j.irfa.2023.102910

VancouverVancouver

Nguyen PLT, Alsakka R, Mantovan N. Political Preferences and Stock Markets. International Review of Financial Analysis. 2023 Nov;90:102910. Epub 2023 Sept 12. doi: 10.1016/j.irfa.2023.102910

Author

Nguyen, Phuc Lam Thy ; Alsakka, Rasha ; Mantovan, Noemi . / Political Preferences and Stock Markets. In: International Review of Financial Analysis. 2023 ; Vol. 90.

RIS

TY - JOUR

T1 - Political Preferences and Stock Markets

AU - Nguyen, Phuc Lam Thy

AU - Alsakka, Rasha

AU - Mantovan, Noemi

PY - 2023/11

Y1 - 2023/11

N2 - The aim of this paper is to investigate the sensitivity of stock markets to election uncertainty and election shock. The analysis employs both fixed effect modelling approach and event study methodology, and utilizes a unique dataset of polling results measuring political preferences over 91 elections in EU countries. We show that election uncertainty induced by changes in political support significantly affects the volatility of stock markets in the pre-election period. Stock volatility also increases in post-election periods. We find that the difference between the outcome of the election and the expected one contributes to the magnitude of election shock, which influences stock markets. These suggest that the accuracy of pre-election polls can be used by market participants and academics as a proxy for market expectations. Our findings have also important implications for optimal investing strategies around elections and are of interest to fiscal policy makers and regulators of pollsters.

AB - The aim of this paper is to investigate the sensitivity of stock markets to election uncertainty and election shock. The analysis employs both fixed effect modelling approach and event study methodology, and utilizes a unique dataset of polling results measuring political preferences over 91 elections in EU countries. We show that election uncertainty induced by changes in political support significantly affects the volatility of stock markets in the pre-election period. Stock volatility also increases in post-election periods. We find that the difference between the outcome of the election and the expected one contributes to the magnitude of election shock, which influences stock markets. These suggest that the accuracy of pre-election polls can be used by market participants and academics as a proxy for market expectations. Our findings have also important implications for optimal investing strategies around elections and are of interest to fiscal policy makers and regulators of pollsters.

U2 - 10.1016/j.irfa.2023.102910

DO - 10.1016/j.irfa.2023.102910

M3 - Article

VL - 90

JO - International Review of Financial Analysis

JF - International Review of Financial Analysis

SN - 1057-5219

M1 - 102910

ER -