Can political factors explain the behaviour of stock prices beyond the standard present value models?

Wisniewski, Tomasz Piotr (2009). Can political factors explain the behaviour of stock prices beyond the standard present value models? Applied Financial Economics, 19(23) pp. 1873–1884.

DOI: https://doi.org/10.1080/09603100903166189

Abstract

This article documents that political factors can be linked to that part of stock prices which cannot be explained by the standard present value models. The nonfundamental component of stock market index appears to be significantly influenced by the political orientation of the president and his approval rating, election cycle and military conflicts. The findings presented here indicate that there is much more to the price formation process than the present value of future dividends.

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