Government policy uncertainty and stock prices: The case of Australia's uranium industry

Andrew Ferguson and Peter Lam

Energy Economics, 2016, vol. 60, issue C, 97-111

Abstract: We investigate effects of government policy uncertainty on stock prices, reflecting tension between ‘private interest’ (economic benefits) and ‘public interest’ arguments over uranium mining. Using a sample of Australian-listed uranium firms from January 2005 through June 2008, we document a positive contemporaneous correlation between stock returns and volatility and two measures of government policy uncertainty, proxied by the spread in voters' opinion polls between the two major political parties and a news-based sentiment index. Event-study results show significant stock price reactions to key uranium-related policy events, with cross-sectional variation in event returns predicted by models incorporating firm- and project-level characteristics. Our research design and findings may inform future research on the capital market effects of government policy uncertainty in other regulated industries.

Keywords: Uranium; Government policy uncertainty; Event study; Stock prices; Opinion polls; Sentiment (search for similar items in EconPapers)
JEL-codes: G14 L5 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:60:y:2016:i:c:p:97-111

DOI: 10.1016/j.eneco.2016.08.026

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