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Opinion polls and the stock market: evidence from the 2008 US presidential election


  • Demissew Diro Ejara
  • Raja Nag
  • Kamal P. Upadhyaya


This article analyses stock market reactions to election polls. Stock markets anticipate the impact of events on future cash flows. Current values depend on future cash flows and risk prospects. We posit that election polls are indications of the political platforms that are expected to win elections. Given the traditional philosophical differences between the Republican and the Democratic Parties, and the specific campaign promises of the US presidential candidates in the 2008 election, we hypothesize that stock market reacts negatively to the prospect of Barack Obama winning the election. We test this hypothesis by relating daily stock index returns to a lag value of differences in election polls that show Obama's advantage over John McCain. The results consistently show that stock market reacts negatively (positively) when Obama (McCain) has poll advantage over McCain (Obama). We conclude that there are differences in perception between Main Street and Wall Street.

Suggested Citation

  • Demissew Diro Ejara & Raja Nag & Kamal P. Upadhyaya, 2012. "Opinion polls and the stock market: evidence from the 2008 US presidential election," Applied Financial Economics, Taylor & Francis Journals, vol. 22(6), pages 437-443, March.
  • Handle: RePEc:taf:apfiec:v:22:y:2012:i:6:p:437-443
    DOI: 10.1080/09603107.2011.617692

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    References listed on IDEAS

    1. Chan, Yue-cheong & John Wei, K. C., 1996. "Political risk and stock price volatility: The case of Hong Kong," Pacific-Basin Finance Journal, Elsevier, vol. 4(2-3), pages 259-275, July.
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    1. repec:eee:ecofin:v:42:y:2017:i:c:p:546-563 is not listed on IDEAS
    2. Christopher Duquette & Franklin Mixon & Richard Cebula & Kamal Upadhyaya, 2014. "Prediction Markets and Election Polling: Granger Causality Tests Using InTrade and RealClearPolitics Data," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(4), pages 357-366, December.
    3. Benton Allyson Lucinda, 2013. "Partisan policy promises and sector-specific stock-market performance: evidence from Mexico’s 2006 presidential campaign," Business and Politics, De Gruyter, vol. 15(2), pages 187-215, August.

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