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Impact of Political Events on Stock Market: Evidence from Pakistan

Author

Listed:
  • Shahid Mahmood
  • Muhammad Irfan
  • Saeed Iqbal
  • Muhammad Kamran
  • Ali Ijaz

Abstract

In this paper it is examined that how much political events impact the KSE-100 index returns, fifty major political events are selected from the period of 1998 to 2013. To calculate the abnormal returns, event study methodology is applied and KSE-100 index returns data for 30 days before and 60 days after happening of an event are also collected. Results of each window verify that negative abnormal returns are observed some days before and some days after happening of an event. This study helps the investor to judge the effect of political events on KSE-100 index returns and develop strategy according to the political environment. Only major political events are selected for a selected time horizon which is not covering the all political episodes. Political conditions vary country to country and period to period. Further researches can be made by selecting different political events for any other country. This study contributes in literature and verifies the significant relationship between political events and stock market returns.

Suggested Citation

  • Shahid Mahmood & Muhammad Irfan & Saeed Iqbal & Muhammad Kamran & Ali Ijaz, 2014. "Impact of Political Events on Stock Market: Evidence from Pakistan," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 4(12), pages 163-174.
    • Handle: RePEc:asi:joabsj:v:4:y:2014:i:12:p:163-174:id:4136
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    Citations

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    Cited by:

    1. Sami Ur Rahman & Ihtesham Khan & Muhammad Faizan Malik, 2018. "The Impact of Political Activities on PSX: The Evidence from Pakistan," Global Economics Review, Humanity Only, vol. 3(2), pages 55-66, December.
    2. Ghulam Ghouse & Muhammad Ishaq Bhatti & Muhammad Hassam Shahid, 2022. "Impact of COVID-19, Political, and Financial Events on the Performance of Commercial Banking Sector," JRFM, MDPI, vol. 15(4), pages 1-18, April.
    3. Ani SUMARMI & Dyah SAWITRI & Umi MUAWANAH & Abdul HALIM, 2021. "Indonesian Capital Market Investors’ Reaction To The Events Of The Covid-19 Pandemic," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 11(5), pages 138-157, October.
    4. Goodell, John W. & Kumar, Satish & Rao, Purnima & Verma, Shubhangi, 2023. "Emotions and stock market anomalies: A systematic review," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    5. Ghulam Ghouse & Aribah Aslam & Muhammad Ishaq Bhatti, 2021. "Role of Islamic Banking during COVID-19 on Political and Financial Events: Application of Impulse Indicator Saturation," Sustainability, MDPI, vol. 13(21), pages 1-17, October.
    6. Supramono Supramono & Widhiastuti Wilis & I. Utami, 2017. "Market Reaction to Cabinet Reshuffle: The Indonesian Evidence," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 183-188.
    7. Lucía Morales & Bernadette Andreosso-O’Callaghan, 2019. "Challenges and Opportunities Brought to the Chinese Economy by Brexit and the New US Administration," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 18(2), pages 145-171, August.
    8. Muhammad Tariq & Dr.Alam Raza & Azizullah & Ghulam Mustafa Shaikh, 2016. "Investing The Pricing Of Exchange Rate Risk In The Stock Market: Evidence From Pakistan Stock Market," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 12(2), pages 87-102.
    9. Rasha Tawfiq Abadi & Florinda Silva, 2022. "Do Islamic fundamental weighted indices outperform their conventional counterparts? An empirical investigation during the crises in the MENA region," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 241-266, June.
    10. Keshav Singhania & Girish, G. P., 2015. "Impact of macroeconomic events on shanghai stock exchange," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 5(6), pages 64-76, June.

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