Precarious Politics and Return Volatility

Boutchkova, Maria; Doshi, Hitesh; Durnev, Art; Molchanov, Alexander

doi:10.2139/ssrn.1317834

Cited by 53 publications

(40 citation statements)

References 60 publications

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“…By looking at 27 OECD countries, Bialkowski et al (2008) find that the countryspecific part of stock index return variance is significantly elevated during periods of national elections. Boutchkova et al (2012) further note that volatility around vote-casting periods is increased by greater magnitudes in industries that are more sensitive to political factors. These empirical observations are reinforced by the theoretical model of Pástor and Veronesi (2012) predicting that policy changes should raise stock return variances and markets should compensate investors for taking on this risk.…”

Section: Political Business Cycle and Electionsmentioning

confidence: 92%

Is There a Link between Politics and Stock Returns? A Literature Survey

Wisniewski

2015

SSRN Journal

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This survey starts by reviewing the literature investigating whether political connectedness of companies creates wealth for their shareholders. It then moves on to examine whether there is an association between the orientation of the political executive or the phase of the electoral cycle with movements of the stock market index. The price impact of politically-relevant events, such as wars, terrorist attacks, revolutions, coups or issuance of communications by those in positions of power is also discussed. The review closes with an examination of the impact of political uncertainty on stock markets and with a reflection on the direction of causality.JEL codes: G12; G14; G18; F50

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Section: Political Business Cycle and Electionsmentioning

confidence: 92%

Is There a Link between Politics and Stock Returns? A Literature Survey

Wisniewski

2015

SSRN Journal

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“…Bialkowski, Gottschalk, and Wisniewski (2008) and Boutchkova, Doshi, Durnev, and Molchanov (2012) report that firms operating in politically related industries tend to experience higher stock return volatility during presidential election periods. Using a sample that includes 248 national elections in 48 countries over the period 1980-2005, Julio and Yook (2012 document a negative effect of presidential elections on investments.…”

Section: Robustness Checksmentioning

confidence: 99%

Policy Uncertainty and Mergers and Acquisitions

Nguyen¹,

Phan²

2017

J. Financ. Quant. Anal.

450

220

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This research examines the relationship between policy uncertainty and mergers and acquisitions (M&As). We find that policy uncertainty is negatively related to firm acquisitiveness and positively related to the time it takes to complete M&A deals. In addition, policy uncertainty motivates acquirers to use stock for payment and to pay lower bid premiums. Acquirers, on average, create larger shareholder value from M&A deals undertaken during periods of high policy uncertainty, which is attributable to their prudence as well as the wealth transfer from the financially constrained targets to acquirers.

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“…10 Second, national elections in which political leaders are elected and economic policies are determined serve as an effective setup to examine the effects of policy uncertainty on real activities such as investment and equity trading (e.g., Julio and Yook (2012), Boutchkova et al (2012)). Third, elections are not subject to biases that occur in survey sampling and model estimation.…”

Section: Proxies and Sample Construction A Proxies For Policy Amentioning

confidence: 99%

“…Durnev (2011) finds that policy uncertainty reduces firm investment's sensitivity to stock prices. Boutchkova, Doshi, Durnev, and Molchanov (2012) show that both national and global political uncertainty (e.g., national elections) lead to higher stock return volatility. Brogaard and Detzel (2015) find that economic policy uncertainty is negatively (positively) associated with contemporaneous (future) stock returns.…”

Section: Introductionmentioning

confidence: 99%

What Affects Innovation More: Policy or Policy Uncertainty?

Bhattacharya¹,

Hsu²,

Tian³

et al. 2017

J. Financ. Quant. Anal.

413

160

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Motivated by a theoretical model, we examine for 43 countries whether it is policy or policy uncertainty that affects technological innovation more. Innovation activities, measured by patent-based proxies, are not, on average, affected by which policy is in place. Innovation activities, however, drop significantly during times of policy uncertainty measured by national elections. The drop is greater for more influential innovations (citations in the right tail, exploratory rather than exploitative innovations) and for innovation-intensive industries. We use close presidential elections and ethnic fractionalization to address endogeneity concerns. We uncover the mechanism underlying the main result by showing that the number of patenting inventors decreases with policy uncertainty. Political compromise, we conclude, encourages innovation.

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Precarious Politics and Return Volatility

Cited by 53 publications

References 60 publications

Is There a Link between Politics and Stock Returns? A Literature Survey

Is There a Link between Politics and Stock Returns? A Literature Survey

Policy Uncertainty and Mergers and Acquisitions

What Affects Innovation More: Policy or Policy Uncertainty?

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