Stocks’ prices manipulation around national elections?. An event study for the case of Greek banking sector
| Date | 03 May 2016 |
| Published date | 03 May 2016 |
| DOI | https://doi.org/10.1108/JFC-03-2014-0012 |
| Pages | 248-256 |
| Author | Spyridon Repousis |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Stocks’ prices manipulation
around national elections?
An event study for the case of
Greek banking sector
Spyridon Repousis
Department of Economics, University of Peloponnese, Patras, Greece
Abstract
Purpose – The purpose of this paper is to examine the inuence of major non-economic events such as
the results of ve Greek national Parliamentary elections during 1996-2009 on the Greek banks’ stocks.
Design/methodology/approach – Using daily data from the Athens Stock Exchange, event study
methodology and market model, the results of this paper claim that the ve Greek national
Parliamentary elections during the 1996-2009 period had no statistically signicant effect on the Greek
banks’ stocks. The results show that cumulative average abnormal returns (CAARs) were slightly
positive or negative for Greek banks’ stocks but not statistically signicant at 5 and 10 per cent
condence levels.
Findings – Investors were not surprised and the political information caused no change and no
inuence on the future and course of the stock market. Expected winning political party was the same
as the actual winning political party. Results showed that during pre-event period of 2000 and 2004
Greek national Parliamentary elections, CAARs for Greek banks’ stocks were slightly positive and after
the event period were slightly negative but not statistically signicant at all periods. During 2007 Greek
national Parliamentary elections, the effect of elections changed because CAARs were generally
slightly negative during the pre-event period and positive after the event period. Also, non-statistically
signicant CAARs indicate that there is no evidence that either political party was able to manipulate
bank stocks’ prices for election purposes.
Originality/value – The main contribution of this paper is to provide evidence about effects of
national elections to bank stocks’ prices which have important implications for stockbrokers, investors,
politicians and political analysts.
Keywords Banks, Event study, Greece, Stock returns, Efcient markets
Paper type Research paper
1. Introduction
Political events usually have a major inuence on nancial markets because markets
respond to new information. Investors may revise their expectations, hopes and
investment strategies based on the results of the national elections.
Informational efciency supports that uncertainty about the outcome of elections
may be resolved prior to the actual election date. According to Brown et al. (1988),as
uncertainty is reduced, price changes tend to be positive on average. Elections affect the
stock market only if the outcome of the election is unexpected; hence, it contains new
information. Most of the studies have focused on the US and the UK stock markets and
election date.
JEL classication – G14, G15, G21
The current issue and full text archive of this journal is available on Emerald Insight at:
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JFC
23,2
248
Journalof Financial Crime
Vol.23 No. 2, 2016
pp.248-256
©Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-03-2014-0012
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