The effect of political uncertainty on the stock market: the case of British Telecom

Measurement of Political Effects in the United States Economy: A Study of the 1992 Presidential Election

“…Humana, a for-pro®t hospital, and US Healthcare, a health maintenance organization). 1992 PRESIDENTIAL ELECTION 59 10 Manipulations of poll standings like those in Manning (1989) and Gemmill (1992) address the relationship of polls and electoral standing, but they are ad hoc in their speci®cation of a mapping from the former to the latter. See Shum (1995) on the issue of polls and probabilities.…”

“…These analyses, each of which focuses on a single election, show implicitly the dependence of stock market indices on national political events. The eight papers examine the 1981 French election which led to the nationalization of 49 French ®rms under the February 11, 1982, Nationalization Law (Langohr and Viallet, 1986), the 1988 Canadian election which was largely a referendum on the Canada±US Free Trade Agreement (Brander, 1991), the British general election in 1987 which determined, inter alia, whether British Telecom would be re-nationalized by the Labour Party (Manning, 1989;Gemmill, 1992), the 1980 United States presidential election which featured a strong contrast on defense policy between Reagan and Carter (Roberts, 1990), the 1992 United States presidential election (Roberts, 1994), and the 1992 United Kingdom Election (Gemmill, 1995;Herron, 1997).…”

“…One potential shortcoming in Langohr and Viallet (1986), Manning (1989), and Brander (1991) is the use of opinion poll data in assessing political events. Most polls are conducted over multi-day periods, so a poll's results generally will not represent political event information at any one point in time.…”

Political uncertainty and asset valuation: Evidence from business relocations in Canada

“…The actual outcome of the elections turned out to be consistent with the predictions of the stock market and the opinion polls, thus suggesting that the index options market was informationally inefficient. Manning (1989) also studied the impact of opinion polls around the 1987 elections in the UK and found that the share price of British Telecom (which was threatened with re-nationalization in the event of a Labor victory) did not respond to the publication of opinion poll data. 2 Similar evidence on the impact of opinion polls on the stock market for the US is reported in Niederhoffer et al (1970) and Riley and Luksetich (1980).…”

Partisan Politics, Interest Rates and the Stock Market: Evidence From American and British Returns in the Twentieth Century

“…Given the difficulty of predicting the day-to-day performance of any asset traded in efficient markets, it is hardly surprising that empirical studies relating political variables to equity returns in the United States and the United Kingdom have found very mixed results (e.g. Homaifar et al, 1988;Manning, 1989;Niederhoffer et al, 1979;Stovall, 1992). 1 With respect to the link between partisanship and stock price volatility, however, studies generally converge on the result that the incumbency and/or anticipation of the left-wing party assuming power increases stock market volatility (Gartner and Wellershoff, 1995;Gemmill, 1995;Herron, 2000;Peel et al, 1993).…”