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Parliamentary Elections and Frontier Stock Markets: Evidence from Stock Market Reaction to General Elections in the Commonwealth Caribbean

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  • C. Justin Robinson
  • Prosper Bangwayo-Skeete

Abstract

This study is the first to investigate stock price reaction to parliamentary elections in the Commonwealth Caribbean. The study finds that parliamentary elections have a statistically significant effect on stock prices in the Bahamas, Barbados, Jamaica and Trinidad and Tobago, but no effect in the Eastern Caribbean and Guyana. The evidence suggests that equity investors in the Bahamas, Barbados, Jamaica and Trinidad and Tobago have an opinion on the prospects for their investments under different political administrations and these opinions are expressed through the trading of shares around the election cycle. However, the results do not provide support for the notion of an ‘election cycle pattern’, that is, a general increase in stock prices around the election cycle, and except in the case of Jamaica, where the stock market appears to disapprove of the People’s National Party (PNP), the results do not provide support for a ‘political party pattern’, that is, a preference among equity investors for a particular political party across the different countries.

Suggested Citation

  • C. Justin Robinson & Prosper Bangwayo-Skeete, 2017. "Parliamentary Elections and Frontier Stock Markets: Evidence from Stock Market Reaction to General Elections in the Commonwealth Caribbean," Global Business Review, International Management Institute, vol. 18(5), pages 1077-1088, October.
    • Handle: RePEc:sae:globus:v:18:y:2017:i:5:p:1077-1088
    DOI: 10.1177/0972150917710136
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    Cited by:

    1. ROBINSON, C. Justin & BANGWAYO-SKEETE, Prosper, F., 2018. "The Information Content Of Dividend Announcements: Evidence From Frontier Markets With Varying Tax Regimes In Jamaica And Trinidad And Tobago, 2001-2017," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 18(2), pages 73-86.

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