Can Political Factors Explain the Behavior of Stock Prices Beyond the Standard Present Value Models?

31 Pages Posted: 25 Jul 2007 Last revised: 1 May 2009

Date Written: July 24, 2007

Abstract

This paper documents that political factors can be linked to the part of stock prices that cannot be explained by the standard present value models. The non-fundamental component of stock market index appears to be significantly influenced by the political orientation of the president and his approval rating, election cycle and military conflicts. The findings presented here indicate that there is much more to the price formation process than the present value of future dividends.

Keywords: Present Value Models, Politics, Asset Pricing

JEL Classification: G12, G14, E60

Suggested Citation

Wisniewski, Tomasz Piotr, Can Political Factors Explain the Behavior of Stock Prices Beyond the Standard Present Value Models? (July 24, 2007). Available at SSRN: https://ssrn.com/abstract=1002606 or http://dx.doi.org/10.2139/ssrn.1002606

Tomasz Piotr Wisniewski (Contact Author)

Open University, UK ( email )

Walton Hall
Milton Keynes, Buckinghamshire MK7 6AA
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
443
Abstract Views
2,425
rank
92,539
PlumX Metrics