Abstract
Using data on political speeches, I demonstrate that U.S. presidential candidates influence stock market outcomes. Political speeches that contain economic information increase aggregate market returns and trading volume but decrease market volatility. Speeches with a net negative linguistic tone have the opposite effect. The magnitude of the effect becomes stronger during the first months of campaigns and varies based on the prevailing market conditions. In the cross-section of stock returns, I show that industries with high government exposure are more sensitive to government-spending information and that politically sensitive industries do not react more strongly to candidate speeches. Overall, my findings suggest that political speeches affect investor expectations and, in turn, stock market outcomes.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
