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U.S. Presidential news coverage: Risk, uncertainty and stocks

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  • Chan, Kam Fong
  • Smales, Lee A.

Abstract

By measuring the frequency of risk and uncertainty synonyms adjacent to mentions of sitting U.S. Presidents in news articles, this study introduces the Presidential Uncertainty and Risk (PUR) index. The index displays distinctive spikes during pivotal events such as presidential elections, presidential debates, and military conflicts, thus capturing signals relevant to investors gauging political risk and uncertainty. This robust pattern is consistent across different Presidential administrations, irrespective of the incumbent President's political party. Firms featured in PUR-news articles attract the attention of both retail and institutional investors. Moreover, a unit increase in the standard deviation of the frequency of words connotating risk and uncertainty is associated with an economically significant 21.3 basis points decrease in abnormal stock returns over the month following the news. These findings suggest that heightened political risk and uncertainty affect both investor attention and stock performance.

Suggested Citation

  • Chan, Kam Fong & Smales, Lee A., 2025. "U.S. Presidential news coverage: Risk, uncertainty and stocks," International Review of Economics & Finance, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:reveco:v:98:y:2025:i:c:s1059056025000905
    DOI: 10.1016/j.iref.2025.103927
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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G40 - Financial Economics - - Behavioral Finance - - - General

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