Who Will Fare Better in a Political Crisis?

Hsu-Huei Huang, Min-Lee Chan and Ann Yang

Emerging Markets Finance and Trade, 2014, vol. 50, issue S3, 22-34

Abstract: Because a political crisis may negatively affect stock returns, it is important for investors to know which firms will be affected less adversely by such a crisis. This study shows that firms that are controlled by families or have high growth opportunities will experience larger declines in their stock prices and a longer period of decline. Firms with outside directors, higher ratios of outside directors, or higher institutional shareholdings will experience smaller declines in their stock prices and a shorter period of decline. In other words, firms with better governance mechanisms and those considered value stocks will be less adversely affected by a political crisis; thus, their investors will suffer fewer negative effects.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:50:y:2014:i:s3:p:22-34

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DOI: 10.2753/REE1540-496X5003S302

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