Abstract
Do political preferences influence the portfolio decisions of money managers? Previous research demonstrates that policy platforms are capitalized into equity prices. However, the literature stops short of inquiring how real world investors select securities in response to political developments. This paper asks whether money managers’ portfolio decisions are affected by political considerations during the 2000 United States Presidential Election. Institutional investors overweight on Bush stocks if they are Republican and on Gore stocks if they are Democratic oriented. During the presidential election cycle, politically motivated trades outperform non-political trades.
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