The market`s (non) reaction to ministerial instability

Abstract

This research analyzes the impact of the ministerial instability on the market value of Brazilian companies. We use a study of events to measure the abnormal returns of the companies in 26 events, covering the period from 2019 to 2022. The estimation window used was 252 previous returns to the event window. We select the 100 companies with the greatest participation in the Bovespa index, without considering holdings. Regarding abnormal returns, only two specific events stood out. Overall, at 90%, 95% and 99% confidence intervals, the results do not allow confirming or rejecting the hypothesis that the stock market reacted to ministerial instability during the government of Jair Bolsonaro. The lack of a relationship between the Brazilian stock market and politics reveals a possible disregard on the part of the market for and with the instabilities of public policies that may be promoted by ministerial instability.