Political Orientation of Government and Stock Market Returns

Jedrzej Bialkowski, Katrin Gottschalk and Tomasz Wisniewski

No 2006,9, Working Paper Series from European University Viadrina Frankfurt (Oder), The Postgraduate Research Programme Capital Markets and Finance in the Enlarged Europe

Abstract: Prior research documented that U.S. stock prices tend to grow faster during Democratic administrations than during Republican administrations. This letter examines whether stock returns in other countries also depend on the political orientation of the incumbents. An analysis of 24 stock markets and 173 different governments reveals that there are no statistically significant differences in returns between left-wing and right-wing executives. Consequently, international investment strategies based on the political orientation of countries' leadership are likely to be futile.

Keywords: Stock market returns; Politics; Presidential puzzle (search for similar items in EconPapers)
JEL-codes: G11 G14 G15 (search for similar items in EconPapers)
Date: 2006
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Working Paper: Political orientation of government and stock market returns (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:euvgra:20069

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