Is There A Presidential Election Cycle In Firm Financials?

Keywords

financial statements; Presidential election cycle

Abstract

A presidential election cycle (PEC) in stock returns has been well-documented in the academic literature. Prior studies have pointed to economic policy as a cause of the phenomenon apparently overlooking the role of firm value. This study examines changes in firm valuation as the cause. Using firm-level data, this study finds a convincing cycle in firms' book-to-market (BE/ME) ratios, earnings yield and most notable, in log-changes in annual revenue. In particular, log-changes in revenue during the election year appear to be instrumental in the previously document PEC in stock returns.

Publication Date

6-1-2016

Publication Title

Review of Pacific Basin Financial Markets and Policies

Volume

19

Issue

2

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1142/S0219091516500107

Socpus ID

84977106561 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84977106561

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