THE EFFECTS OF CONGRESSIONAL ELECTIONS ON FUTURE EQUITY MARKET RETURNS

Vincent Louis Ovlia, David Enke and Michael Davis

Global Journal of Business Research, 2008, vol. 2, issue 1, 1-15

Abstract: As the primary entity responsible for new legislation, Congress is capable of enacting legislation that may affect future market returns. To examine potential effects, the percentage of the House of Representatives and Senate controlled by a political party is examined. Additionally, the effect on returns in a change in the percentage of seats gained or lost in Congressional elections is analyzed. To test both theories, a modified partisan view model is adopted. Results point to the fact that equity markets perform better in situations in which power is distributed between political parties.

JEL-codes: G12 G13 G14 H00 (search for similar items in EconPapers)
Date: 2008
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