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

Nenad Tomić (), Violeta Todorovic and Milena Jaksić
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Nenad Tomić: University of Kragujevac Faculty of Economics
Violeta Todorovic: University of Kragujevac Faculty of Economics
Milena Jaksić: University of Kragujevac Faculty of Economics

Journal for Economic Forecasting, 2023, issue 2, 92-103

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.

Keywords: event study; abnormal return; market return; presidential elections (search for similar items in EconPapers)
JEL-codes: C12 G14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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