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National pride, investor sentiment, and stock markets

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  • Meni Abudy, Menachem
  • Mugerman, Yevgeny
  • Shust, Efrat

Abstract

This paper investigates the stock market reaction to an uplift in investor mood anticipating a country’s independence day celebration. A cross-country analysis reveals a positive abnormal return on the trading day immediately prior to the country’s independence day. This finding is robust to various event-study methods and to various benchmarks. This positive return is subsequently reversed. Further, we find a relation between the abnormal return of a country on its independence day and measures of national pride and social culture. Focusing on the United States, we find a decrease in economic uncertainty measures on its independence day. Overall, our evidence suggests that national pride leads to investor sentiment in capital markets.

Suggested Citation

  • Meni Abudy, Menachem & Mugerman, Yevgeny & Shust, Efrat, 2023. "National pride, investor sentiment, and stock markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:intfin:v:89:y:2023:i:c:s1042443123001476
    DOI: 10.1016/j.intfin.2023.101879
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