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Do opinion polls on government preference influence stock returns?

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  • Narayan, Paresh Kumar
  • Narayan, Seema

Abstract

We investigate the role of opinion polls on intention to vote in influencing Australian stock returns. We unravel robust evidence suggesting that stock returns react more to a preference to vote for the Australian Labor Party (ALP) than the Liberal-National Party (LNP). A one standard deviation increase in preference for ALP increases excess returns by 28.08% of its sample mean while the corresponding effect of LNP preference is only 15.48%. Economically, therefore, the effect of ALP preferences on excess returns is almost twice that of LNP. Results are robust to different portfolio formation, measures of returns, and controls for returns.

Suggested Citation

  • Narayan, Paresh Kumar & Narayan, Seema, 2021. "Do opinion polls on government preference influence stock returns?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    • Handle: RePEc:eee:beexfi:v:30:y:2021:i:c:s221463502100037x
    DOI: 10.1016/j.jbef.2021.100493
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