In Sickness and in Wealth: The Impact of Leaders' Health on Markets

31 Pages Posted: 20 Nov 2020

See all articles by Manuel R Manuel

Manuel R Manuel

Pontifical Catholic University of Chile

Pablo Hernandez-Lagos

New York University, Abu Dhabi

Tomas Reyes

Pontifical Catholic University of Chile

Date Written: October 3, 2020

Abstract

We study the effect of head of states' health on markets. We collect data on unexpected exits from office to determine whether these exits affect stock market returns across countries between 1923 and 2015. Health problems precede almost all unexpected exits. Unexpected exits lead to about 1% abnormal return, due mainly to extreme positive jumps following exits of autocrats and non-college leaders. To identify citizens' awareness of a leader's health problems, we collect data on rumors about health issues emerging prior to the leader's exit. The start of rumors generates about 1% negative abnormal returns. The health of leaders matters.

Keywords: National Leaders; Stock Market; Illness

JEL Classification: D53; G14; G15

Suggested Citation

Manuel, Manuel R and Hernandez-Lagos, Pablo and Reyes, Tomas, In Sickness and in Wealth: The Impact of Leaders' Health on Markets (October 3, 2020). Available at SSRN: https://ssrn.com/abstract=3704092 or http://dx.doi.org/10.2139/ssrn.3704092

Manuel R Manuel

Pontifical Catholic University of Chile ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, RegiĆ³n Metropolitana 8331150
Chile

Pablo Hernandez-Lagos (Contact Author)

New York University, Abu Dhabi ( email )

PO Box 903
NYC, NY 10276-0903
United States

HOME PAGE: http://pablohernandez-lagos.com

Tomas Reyes

Pontifical Catholic University of Chile ( email )

Vicuna Mackenna 4860
Santiago, RM 7820436
Chile

HOME PAGE: http://www.uc.cl

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