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Elections and political risk: New evidence from the 2008 Taiwanese Presidential Election

  • Imai, Masami
  • Shelton, Cameron A.

We examine the effects of party platforms on the economic opportunities of firms using a unique data set from a political prediction market in Taiwan, a country with two dominant parties whose political cleavage derives mainly from a single issue: the “One China Principle”. We find that during the 2008 Presidential campaign, the share price of Taiwanese firms with investments in the mainland responded strongly and positively to a positive electoral outlook for the KMT, the party which advocates lifting caps on cross-strait investment in mainland China. The response is strongest for those firms who have already hit their caps.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 7 ()
Pages: 837-849

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:7:p:837-849
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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