Stock Market reaction to Election Results: an Event Study Analysis

Abstract

[eng] The aim of this paper is to find the possible effect that estimation vote surveys have over the share prices of public companies listed in the Spanish stock market. To test this effect, we used the event study methodology. For the event study, daily data from 6 firms listed on the IBEX35 index are analyzed over the period of 1st January 2000 to 31st December 2015. Alongside the event study, another analysis has been conducted to test the economic literature that finds a positive relation between right-wing parties and the stock market. The results of this paper have not shown significant changes for the days surrounding the publication of estimation vote, known as event day. Although it can be observed a positive reaction to PP vote increases, confirming what the literature suggests. This indicates that the event indeed does affect the stock market depending on which party outcomes the other. The results also indicate that certain companies were more exposed to the political results than others.