Political Orientation of Government and Stock Market Returns

Bialkowski, Jedrzej Pawel; Gottschalk, Katrin; Wisniewski, Tomasz Piotr

doi:10.2139/ssrn.921258

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Political Orientation of Government and Stock Market Returns

12 Pages Posted: 31 Jul 2006

See all articles by Jedrzej Pawel Bialkowski

Jedrzej Pawel Bialkowski

University of Canterbury - Department of Economics and Finance

Katrin Gottschalk

Auckland University of Technology - Business School - Department of Finance; European University Viadrina - Department of Finance and Capital Market Theory

Tomasz Piotr Wisniewski

Open University, UK

Date Written: July 30, 2006

Abstract

Prior research documented that U.S. stock prices tend to grow faster during Democratic administrations than during Republican administrations. This letter examines whether stock returns in other countries also depend on the political orientation of the incumbents. An analysis of 24 stock markets and 173 different governments reveals that there are no statistically significant differences in returns between left-wing and right-wing executives. Consequently, international investment strategies based on the political orientation of countries' leadership are likely to be futile.

Keywords: Stock Market Returns, Politics, Presidential Puzzle

JEL Classification: G11, G14, G15

Suggested Citation: Suggested Citation

Bialkowski, Jedrzej Pawel and Gottschalk, Katrin and Wisniewski, Tomasz Piotr, Political Orientation of Government and Stock Market Returns (July 30, 2006). Available at SSRN: https://ssrn.com/abstract=921258 or http://dx.doi.org/10.2139/ssrn.921258