The Effects of Congressional Elections on Future Equity Market Returns
Vincent Louis Ovlia
University of Tulsa
Michael C. Davis
Missouri University of Science and Technology - Department of Economics
Global Journal of Business Research, Vol. 2, No. 1, pp.1-15, 2008
As the primary entity responsible for new legislation, Congress is capable of enacting legislation that may affect future market returns. To examine potential effects, the percentage of the House of Representatives and Senate controlled by a political party is examined. Additionally, the effect on returns in a change in the percentage of seats gained or lost in Congressional elections is analyzed. To test both theories, a modified “partisan view” model is adopted. Results point to the fact that equity markets perform better in situations in which power is distributed between political parties.
Number of Pages in PDF File: 15
JEL Classification: G12, G13, G14, H00Accepted Paper Series
Date posted: February 18, 2010
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