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

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

Jedrzej Pawel Bialkowski (Contact Author)

University of Canterbury - Department of Economics and Finance ( email )

Private Bag 4800
Christchurch, 8140
New Zealand

Katrin Gottschalk

Auckland University of Technology - Business School - Department of Finance ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand
++64-9-921-9999-5707 (Phone)
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HOME PAGE: http://www.aut.ac.nz

European University Viadrina - Department of Finance and Capital Market Theory

Grosse Scharrnstr. 59
P.O. Box 1786
Frankfurt (Oder), 15230
Germany
++49-177-6624930 (Phone)

Tomasz Piotr Wisniewski

Open University, UK ( email )

Walton Hall
Milton Keynes, Buckinghamshire MK7 6AA
United Kingdom

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