Effects of election results on stock price performance: evidence from 1980 to 2008

Andreas Oehler (Chair of Finance, Bamberg University, Bamberg, Germany)
Thomas J. Walker (Laurentian Bank Chair in Integrated Risk Management, Department of Finance, Concordia University, Montreal, Canada)
Stefan Wendt (Department of Finance, Bamberg University, Bamberg, Germany)

Managerial Finance

ISSN: 0307-4358

Publication date: 28 June 2013



The authors aim to analyze whether the results of the 1980 to 2008 US presidential elections influence the stock market performance of eight industries and they seek to examine factors that are expected to affect firms' stock returns around these elections. Their empirical analysis reflects firms' exposure to government policies in two ways.


First, to determine whether investors presume any Democratic or Republican favoritism towards or biases against certain industries, the authors perform an event study for each of the eight industries around the eight elections. Second, the authors include the firms' marginal tax rate as proxy for the firms' exposure to uncertainty about fiscal policy in a regression analysis.


The authors do not find a consistent pattern in industry returns when comparing the effect of Democratic vs Republican victories. However, the extent of the reaction differs among industries. The victory of a Democratic candidate rather negatively influences overall stock returns, while the results are rather mixed for Republican victories. A change in presidency from either a Democratic to a Republican candidate or vice versa causes stronger stock market effects than re‐election or the election of a president from the same party. The authors also find that the firms' marginal tax rate is positively correlated with abnormal stock price returns around the election day.


The results are relevant for academics, investors and policy makers alike because they provide insight on the question whether stock market participants respond to expected changes in policy making as a result of presidential elections.



Oehler, A., Walker, T. and Wendt, S. (2013), "Effects of election results on stock price performance: evidence from 1980 to 2008", Managerial Finance, Vol. 39 No. 8, pp. 714-736. https://doi.org/10.1108/MF-May-2012-0126

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