Abstract
This paper investigates the impact of parliamentary general election on the stock market returns by considering the previous fifteen days and the after fifteen days of each of six elections in Bangladesh held between 1991 and 2018. The study analyzed the election effect on stock returns through considering both abnormal returns by choosing 20 stocks as a proxy of portfolio motive of the investors and the broad index returns as a measurement of whole market scenario. The study employed descriptive statistics, t-tests, and F-tests to understand the impact of election by gauging the changes in return series. Descriptive statistics showed very high differences in means, standard deviations, and volatilities. Paired t-tests showed significant differences between the means and F-tests showed significant differences between the variances of the returns during before and after days of these elections. The results were the same for abnormal returns and broad index returns. The impacts of individual election on the returns were also found as the same in most cases. The study has found some very useful insights part of which can benefit the policymakers to reform the policies. The common investors and the financial market participants can also make better investment plan.
Highlights
Stock market is considered as the mirror of the economy of a country (Jensen, Mercer & Johnson, 1996)
All the analysis was carried on to move the discussion to ultimate culmination of result to inform how the general election has impact on the stock market returns from the aspect of Bangladesh
Descriptive Statistics The descriptive statistics of the abnormal returns shown on Table 4 indicate that differences between the means of the returns of before and after each election are very high, the standard deviations of the abnormal returns in case of the after elections are higher than the abnormal returns of before elections in most cases
Summary
Stock market is considered as the mirror of the economy of a country (Jensen, Mercer & Johnson, 1996). The growth of the stock market is an evidence of economic progress of a country. The stock market determines how capital is formulating in the veins of a nation. The fluctuation or volatility of a stock market means a big thing to be concerned of for the https://www.cribfb.com/journal/index.php/asfbr. Vol 5, No 1; 2021 investors, government, and common people as well. Different economic and non-economic factors impact on it. Different political forces and political shifts play as very important factors for almost all the stock markets
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