Abstract
AbstractIt is a part of the received wisdom of the American and British stock exchanges that the market prefers a Conservative administration. However, attempts to test this proposition by examining market returns about the time of elections have produced contrasting and sometimes indecisive results. The present paper assumes that election outcomes will be largely anticipated by the market on the basis of published opinion forecasts. The paper examines the impact of opinion poll information on share prices over the period 1960–79—one largely characterized by two‐party competition. It is found that opinion movements towards the Conservative Party do exert a significant positive impact on the market, but only where the two main parties are relatively evenly balanced.
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