Political News and Stock Prices: The Case of Saddam Hussein Contracts

26 Pages Posted: 13 Aug 2003

See all articles by Yakov Amihud

Yakov Amihud

New York University - Stern School of Business

Avi Wohl

Tel Aviv University - Coller School of Management

Multiple version iconThere are 5 versions of this paper

Date Written: July 2003

Abstract

This paper studies the association between the market's expectations of Saddam Hussein's fall from power, as reflected in "Saddam contract" prices, and stock prices, oil prices and exchange rates. During the war, a rise in the probability of Saddam's fall, which also indicated a speedy end to the war, positively and significantly affected stock prices (R2 was over 40%), strengthened the dollar against the Euro, and lowered oil prices. Before the war, a rise in the probability of Saddam's fall, which may also have indicated the probability of a costly war breaking out, lowered stock prices, which adjusted gradually to this information.

Keywords: political risk, war and the stock market, war and exchange rates

JEL Classification: E6, G1, G14, H56

Suggested Citation

Amihud, Yakov and Wohl, Avi, Political News and Stock Prices: The Case of Saddam Hussein Contracts (July 2003). Available at SSRN: https://ssrn.com/abstract=415640 or http://dx.doi.org/10.2139/ssrn.415640

Yakov Amihud (Contact Author)

New York University - Stern School of Business ( email )

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Avi Wohl

Tel Aviv University - Coller School of Management ( email )

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Israel
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