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Market reactions to unexpected political changes: evidence from advance emerging markets

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  • Blazej Podgorski

Abstract

The main aim of this article is to assess the influence of change in Prime Minister on Polish stock market. Prime Minister Szydło resigned shortly after she survived the second vote of no confidence on December 8, 2017, and was replaced by Morawiecki, the Vice-Prime Minister and Minister of Finance, and a former CEO of a large bank.1 Considering the aforementioned context, this study tests four hypotheses regarding the market reaction in terms of companies’ shareholder structure. An event study analysis was performed to calculate cumulative abnormal returns, and regression models were estimated to test the hypotheses. The author finds significant negative price changes only for state-owned enterprises (SOEs) both directly and indirectly controlled by the government. I assume that this reaction in the case of SOEs was caused by the uncertainty related to the likely changes in the management.

Suggested Citation

  • Blazej Podgorski, 2020. "Market reactions to unexpected political changes: evidence from advance emerging markets," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 33(1), pages 1562-1580, January.
    • Handle: RePEc:taf:reroxx:v:33:y:2020:i:1:p:1562-1580
    DOI: 10.1080/1331677X.2020.1756370
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    Cited by:

    1. Szczygielski, Jan Jakub & Charteris, Ailie & Obojska, Lidia, 2023. "Do commodity markets catch a cold from stock markets? Modelling uncertainty spillovers using Google search trends and wavelet coherence," International Review of Financial Analysis, Elsevier, vol. 87(C).
    2. Stephens, John & Mehdian, Seyed & Gherghina, Ștefan Cristian & Stoica, Ovidiu, 2023. "The reaction of the financial market to the January 6 United States Capitol attack: An intraday study," Finance Research Letters, Elsevier, vol. 56(C).

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