The financial effects of Trumpism

Huy, P, Ramiah, V, Moosa, N, Huynh, T and Pham, N 2018, 'The financial effects of Trumpism', Economic Modelling, vol. 74, pp. 264-274.

Document type: Journal Article
Collection: Journal Articles

Title The financial effects of Trumpism
Author(s) Huy, P
Ramiah, V
Moosa, N
Huynh, T
Pham, N
Year 2018
Journal name Economic Modelling
Volume number 74
Start page 264
End page 274
Total pages 11
Publisher Elsevier BV
Abstract This paper investigates the effects of the 2016 US presidential election, and the events occurring in the run-up to election day, on the US stock market. We examine 47 events, starting with Donald Trump's announcement that he would contest the presidential election, using the event study methodology and asset pricing models. Furthermore, we conduct several robustness tests, including the Corrado ranking test, the non-parametric conditional distribution approach, adjustment for market integration, the removal of firms with firm-specific news, and the use of more than one asset pricing model. We observe that the US stock market was affected by the 2016 presidential election and that the US stock market was highly responsive when Trump secured the Republican nomination. The life insurance sector was one of the most negatively affected sectors due to Trump's intention to replace Obamacare. In addition, our results show that the events around the most recent election can lead to diamond risk structures.
Subject Financial Economics
Keyword(s) Abnormal returns
Diamond risk structure
Event study
Presidential election
DOI - identifier 10.1016/j.econmod.2018.05.020
Copyright notice © 2018 Elsevier BV. All rights reserved.
ISSN 0264-9993
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