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

26 Pages Posted: 12 Nov 2008

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, 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, was positively and significantly associated with stock prices, strengthened the dollar against the Euro, and lowered oil prices. Before the war, a rise in the probability of Saddam s fall, which may have also indicated the probability of a costly war breaking out, lowered stock prices, which adjustment gradually to this information.

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

Suggested Citation

Amihud, Yakov and Wohl, Avi, Political News and Stock Prices: The Case of Saddam Hussein Contracts (July 2003). NYU Working Paper No. S-MF-03-06. Available at SSRN: https://ssrn.com/abstract=1300209

Yakov Amihud (Contact Author)

New York University - Stern School of Business ( email )

44 West 4th Street
Suite 9-190
New York, NY 10012-1126
United States
212-998-0720 (Phone)
212-995-4233 (Fax)

Avi Wohl

Tel Aviv University - Coller School of Management ( email )

P.O. Box 39010
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 6409051 (Phone)

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