IDEAS home Printed from https://ideas.repec.org/a/wsi/rpbfmp/v19y2016i02ns0219091516500107.html
   My bibliography  Save this article

Is There a Presidential Election Cycle in Firm Financials?

Author

Listed:
  • Ray R. Sturm

    () (Department of Finance, College of Business Administration, University of Central Florida, P. O. Box 161400, Orlando, FL 32816, USA)

Abstract

A presidential election cycle (PEC) in stock returns has been well-documented in the academic literature. Prior studies have pointed to economic policy as a cause of the phenomenon apparently overlooking the role of firm value. This study examines changes in firm valuation as the cause. Using firm-level data, this study finds a convincing cycle in firms’ book-to-market (BE/ME) ratios, earnings yield and most notable, in log-changes in annual revenue. In particular, log-changes in revenue during the election year appear to be instrumental in the previously document PEC in stock returns.

Suggested Citation

  • Ray R. Sturm, 2016. "Is There a Presidential Election Cycle in Firm Financials?," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 19(02), pages 1-18, June.
  • Handle: RePEc:wsi:rpbfmp:v:19:y:2016:i:02:n:s0219091516500107
    DOI: 10.1142/S0219091516500107
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0219091516500107
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fama, Eugene F & French, Kenneth R, 1992. " The Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, vol. 47(2), pages 427-465, June.
    2. Ray Sturm, 2009. "The 'other' January effect and the presidential election cycle," Applied Financial Economics, Taylor & Francis Journals, vol. 19(17), pages 1355-1363.
    3. Gili Yen & Cheng-few Lee, 2008. "Efficient Market Hypothesis (EMH): Past, Present and Future," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 11(02), pages 305-329.
    4. Booth, James R. & Booth, Lena Chua, 2003. "Is presidential cycle in security returns merely a reflection of business conditions?," Review of Financial Economics, Elsevier, vol. 12(2), pages 131-159.
    5. Ron Bird & Daniel Choi & Danny Yeung, 2014. "Market uncertainty, market sentiment, and the post-earnings announcement drift," Review of Quantitative Finance and Accounting, Springer, vol. 43(1), pages 45-73, July.
    6. Xiaofeng Zhao & Kartono Liano & William G. Hardin, 2004. "Presidential Election Cycles and the Turn‐of‐the‐Month Effect," Social Science Quarterly, Southwestern Social Science Association, vol. 85(4), pages 958-973, December.
    7. Ray Sturm, 2013. "Economic policy and the presidential election cycle in stock returns," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(2), pages 200-215, April.
    8. Martin T. Bohl & Jörg Döpke & Christian Pierdzioch, 2008. "Real‐Time Forecasting and Political Stock Market Anomalies: Evidence for the United States," The Financial Review, Eastern Finance Association, vol. 43(3), pages 323-335, August.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:rpbfmp:v:19:y:2016:i:02:n:s0219091516500107. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim). General contact details of provider: http://www.worldscinet.com/rpbfmp/rpbfmp.shtml .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.