Stock index manipulation around election announcements: evidence from Pakistan stock exchange

Abstract

The purpose of this study is to find out the impact of political general elections of Pakistan on KSE-100 index. We employed Event study methodology on closing prices of KSE-100 index over the time period January, 1998 to May, 2013. During our sample period, 3 events of political general Elections occurred i.e., Event1 in 2002, Event2 in 2008, and recently Event3 in 2013. We construct an Event window of 11 days consisting of 5 pre-event days, 1 on-event day, and 5 post-event days. Results of this study show that Events 1 -and 2 put significant negative impact on stock returns, while Event3 demonstrates a significant positive impact on stock returns. This study also revealed the pre -and post-event comparison for all of the three events and, suggested that as soon as the political situation of the country changes, behavior of investors towards political general election also changes. Manipulation in stock index has always been remained an inconclusive phenomenon for investors and policy makers. So, further evidence on an individual country level might suggest fruitful guidelines to both investors and policy makers.

The Behavioral Analysis and Financial Performance of Individual Investors at Pakistan Stock Exchange

“…In Overconfidence bias investors rely more on their knowledge, skills and judgment. When investors give more weight to their skills and knowledge instead of ground reality, then investors overvalue or under value stock prices (Khan et al, 2017).This is the main bias in stock market (Sadi et al, 2011).…”

Reaksi Pasar Terhadap Peristiwa Pemilihan Presiden Tahun 2019 Di Bursa Efek Indonesia

“…Informasi dibutuhkan untuk menggerakkan harga sekuritas di pasar modal, karena informasi pada hakekatnya menyajikan gambaran masa lalu, saat ini maupun keadaan di masa yang akan datang (Hoe & Nippani, 2017). Dewasa ini, kemajuan teknologi yang sangat pesat menyebabkan informasi semakin cepat menyebar di masyarakat (Khan et al, 2017). Menurut Brigham dan Houston (2007:460) informasi yang dipublikasikan akan menjadi sinyal bagi pelaku pasar dalam pengambilan keputusan investasi.…”

An Event Study Analysis of Thailand’s 2019 General Election: A Long Window of Multiple Sub-events

“…Otherwise, the windows overlap and it is not clear which sub-event contributes to abnormal returns. This study follows researchers such as Khan et al (2017) to set the pre-and post-event windows to five days, constituting an 11-day window for the event and sub-events.…”

“…Event study analyses are a popular approach to test these effects. For example, for developed markets, Niederhoffer, Gibbs, and Bullock (1970), Oehler, Walker, and Wendt (2013), and Obradovic and Tomic (2017) conducted studies in the U.S.A., while Leblang and Mukherjee (2005) studied both the U.S.A. and the U.K. For emerging markets, studies were conducted for Indonesia, Malaysia, Pakistan, and Taiwan by Imelda, Siregar, and Anggraeni (2014), Redzwan, Musa, Latip, Latif, and Rahman (2019), Khan, Jafri, Baig, Shaique, and Usman (2017), and Hung (2011), respectively. Moreover, Nimkhunthod (2007) performed a study on the Thai market, and Wong and Hooy (2016) studied the Indonesian, Malaysian, and Thai markets.…”