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Speculating on presidential success: exploring the link between price-earnings ratio and approval ratings

Wisniewski, Tomasz Piotr; Lightfoot, Geoffrey and Lilley, Simon (2012). Speculating on presidential success: exploring the link between price-earnings ratio and approval ratings. Journal of Economics and Finance, 36(1) pp. 106–122.

DOI (Digital Object Identifier) Link: https://doi.org/10.1007/s12197-009-9116-0
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Abstract

Stock markets and politics are enduring staples of dinner party conversations but surprisingly little is known about the interaction between the two. Here we present evidence for a robust relationship between a key financial measure—the aggregate Price–Earnings ratio—and surveyed approval of the incumbent president. We argue, following the finance literature, that the price–earnings ratio is a composite measure of investors’ hopes and fears. The partially prospective nature of this ratio enables us to shed new light upon the controversy surrounding how the electorate attends to economic circumstances in judging its presidents.

Item Type: Journal Item
Copyright Holders: 2009 Springer Science+Business Media, LLC
ISSN: 1938-9744
Keywords: Political Economy; Price–Earnings Ratio; Presidential Approval
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for Accounting and Finance
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Item ID: 55389
Depositing User: Tomasz Wisniewski
Date Deposited: 11 Jun 2018 15:54
Last Modified: 07 Dec 2018 21:48
URI: http://oro.open.ac.uk/id/eprint/55389
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