Stock Index Manipulation Around Election Announcements: Evidence from Pakistan Stock Exchange

International Journal of Accounting and Economics Studies. 5(2). 87-91 (2017)

5 Pages Posted: 5 Jul 2017

See all articles by Shahbaz Khan

Shahbaz Khan

Zhongnan University of Economics and Law, School of Finance, Students

Razzi Razzi Abbas Jafri

National Bank Of Pakistan; NBP

Nida Baig

Huazhong University of Science and Technology - College of Public Administration

Muhammad Shaique

Zhongnan University of Economics and Law, School of Accounting, Students

Muhammad Usman

Zhongnan University of Economics and Law, School of Finance, Students

Date Written: July 1, 2017

Abstract

The purpose of this study is to find out the impact of political general elections of Pakistan on KSE-100 index. We employed Event study methodology on closing prices of KSE-100 index over the time period January, 1998 to May, 2013. During our sample period, 3 events of political general Elections occurred i.e., Event1 in 2002, Event2 in 2008, and recently Event3 in 2013. We construct an Event window of 11 days consisting of 5 pre-event days, 1 on-event day, and 5 post-event days. Results of this study show that Events 1 and 2 put significant negative impact on stock returns, while Event3 demonstrates a significant positive impact on stock returns. This study also revealed the pre- and post-event comparison for all of the three events and, suggested that as soon as the political situation of the country changes, behavior of investors towards political general election also changes. Manipulation in stock index has always been remained an inconclusive phenomenon for investors and policy makers. So, further evidence on an individual country level might suggest fruitful guidelines to both investors and policy makers.

Keywords: Political Elections, Pakistan Stock Exchange, Stock Returns, Market Efficiency, Event Study

JEL Classification: G14, G15

Suggested Citation

Khan, Shahbaz and Razzi Abbas Jafri, Razzi and Baig, Nida and Shaique, Muhammad and Usman, Muhammad, Stock Index Manipulation Around Election Announcements: Evidence from Pakistan Stock Exchange (July 1, 2017). International Journal of Accounting and Economics Studies. 5(2). 87-91 (2017), Available at SSRN: https://ssrn.com/abstract=2996079

Shahbaz Khan (Contact Author)

Zhongnan University of Economics and Law, School of Finance, Students ( email )

WenQuan Building, 182# Nanhu Avenue
East Lake High-tech Development Zone
Wuhan
China

Razzi Razzi Abbas Jafri

National Bank Of Pakistan ( email )

NBP Building, I.I. Chundrigar Road
Karachi, Sindh
Pakistan

NBP ( email )

NBP Building, I.I. Chundrigar Road
Karachi, Sindh
Pakistan

Nida Baig

Huazhong University of Science and Technology - College of Public Administration ( email )

Luoyu Road 1037
Wuhan
China

Muhammad Shaique

Zhongnan University of Economics and Law, School of Accounting, Students ( email )

China

Muhammad Usman

Zhongnan University of Economics and Law, School of Finance, Students ( email )

WenQuan Building, 182# Nanhu Avenue
East Lake High-tech Development Zone
Wuhan
China

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