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Is there a link between politics and stock returns? A literature survey

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  • Wisniewski, Tomasz Piotr

Abstract

This survey starts by reviewing the literature investigating whether political connectedness of companies creates wealth for their shareholders. It then moves on to examine whether there is an association between the orientation of the political executive or the phase of the electoral cycle with movements of the stock market index. The price impact of politically-relevant events, such as wars, terrorist attacks, revolutions, coups or issuance of communications by those in positions of power is also discussed. The review closes with an examination of the impact of political uncertainty on stock markets and with a reflection on the direction of causality.

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  • Wisniewski, Tomasz Piotr, 2016. "Is there a link between politics and stock returns? A literature survey," International Review of Financial Analysis, Elsevier, vol. 47(C), pages 15-23.
  • Handle: RePEc:eee:finana:v:47:y:2016:i:c:p:15-23
    DOI: 10.1016/j.irfa.2016.06.015
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    2. repec:eee:riibaf:v:45:y:2018:i:c:p:30-37 is not listed on IDEAS
    3. Duca, John V. & Saving, Jason L., 2018. "What drives economic policy uncertainty in the long and short runs: European and U.S. evidence over several decades," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 128-145.

    More about this item

    Keywords

    Politics; Stock market returns; Literature review;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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