Publication Type
Working Paper
Version
publishedVersion
Publication Date
11-2018
Abstract
Partisan conflict has been one dominant theme in U.S. politics in recent years. By using the textual index of Azzimonti (2018), this paper shows that partisan conflict positively predicts market returns, controlling for economic predictors and proxies for uncertainty, disagreement, geopolitical risk, and political sentiment. A one standard-deviation increase in partisan conflict is associated with a 0.58% increase in next month market return. The forecasting power concentrates in periods when the president is from the Republican Party or the majority of House is Republicans. Partisan conflict is positively related to downside risk, and makes investors more conservative when its value increases.
Keywords
Partisan conflict, Political disagreement, Political sentiment, Downside risk
Discipline
Finance | Finance and Financial Management
Research Areas
Finance
First Page
1
Last Page
40
Publisher
SSRN
Citation
HUANG, Dashan and WANG LIYAO.
Partisan Conflict and Stock Price. (2018). 1-40.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6012
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
External URL
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3221659