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Measuring the Impact of the US Presidential Elections on the Stock Market using Event Study Methodology

Author

Listed:
  • Nenad TOMIĆ

    (University of Kragujevac Faculty of Economics)

  • Violeta TODOROVIC

    (University of Kragujevac Faculty of Economics)

  • Milena JAKSIĆ

    (University of Kragujevac Faculty of Economics)

Abstract

The paper analyzes the sign and statistical significance of abnormal return generated on the New York Stock Exchange as a consequence of two US presidential elections cycles in November 2016 and November 2020. The analysis involved a total of 283 companies listed on the NYSE, in five business sector. The analysis relied on standard event study methodology. The main findings showed that companies in the military, financial and energy sectors have consistent reactions: positive when the Republican candidate wins the elections, and negative when the Democratic candidate wins. Electronic industry companies did not show consistent results: after the 2016 elections, there was no statistically significant abnormal return, while after the 2020 elections they recorded statistically significant positive abnormal return. As for companies in the medical sector, therewas no abnormal return after any election cycle.

Suggested Citation

  • Nenad TOMIĆ & Violeta TODOROVIC & Milena JAKSIĆ, 2023. "Measuring the Impact of the US Presidential Elections on the Stock Market using Event Study Methodology," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 92-103, June.
    • Handle: RePEc:rjr:romjef:v::y:2023:i:2:p:92-103
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    event study; abnormal return; market return; presidential elections;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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