When EU Leaders Speak, the Markets Listen
59 Pages Posted: 3 Aug 2012 Last revised: 27 Aug 2013
Date Written: August 2, 2012
We use content analysis software to examine certain characteristics of communications arising from European Council meetings. These characteristics appear to explain a large proportion of variation in stock returns around the meeting dates. More specifically, stock market investors react favorably when the conclusions and declarations issued by heads of states convey a positive sentiment and demonstrate a stance of moral rectitude. On the other hand, the returns tend to be negative when the communications are obfuscated by an excessive use of abstract words and fixated on regional rather than global issues.
Keywords: Political Effects, European Council, Stock Markets, Content Analysis
JEL Classification: F50, G12, G14, G15
Suggested Citation: Suggested Citation