The influence of the political elections on the course of the Athens Stock Exchange 19962002

Purpose The paper's aim is to examine the influence of the Greek political elections on the course of the Athens Stock Exchange ASE. Using daily data from the ASE General Price Index, it seeks to empirically examine the effect of political elections Parliamentary and European elections on the c...

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Bibliographic Details
Published in:Managerial finance 2008-06, Vol.34 (7), p.479-488
Format: Article
Language:English
Subjects:
Greece
Politics
Seasonality
Stock exchanges
Online Access:Get full text
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Summary:Purpose The paper's aim is to examine the influence of the Greek political elections on the course of the Athens Stock Exchange ASE. Using daily data from the ASE General Price Index, it seeks to empirically examine the effect of political elections Parliamentary and European elections on the course of the ASE over the period 19962002. Designmethodologyapproach This paper examines the relationship between Greek political elections and ASE using ordinary least squares OLS models. It concentrates on the preelection and the postelection periods of the last decade. Daily closing prices of the General ASE index are used for the period 19962002. Findings The results show that two months prior to the elections index performance increases on average and the mean daily fluctuation decreases. One month before the elections, index performance decreases, the mean daily fluctuation increases and the change of daily exchange value increases on average. During the threemonth postelection period, there is a considerable increase of index progress. Furthermore, between three and six months after the elections, a decrease in performance is found, while for a collective six months after the elections, there is remarkably positive course. Using a simple OLS model with a dummy variable, it is found that there is a negative effect of the political elections on the course of the ASE. However, this effect is always insignificant. Practical implications The results have important implications for traders, investors and political analysts. The findings are strongly recommended to financial managers dealing with Greek stock indices. Originalityvalue The main contribution of this paper is to provide evidence using data before and after the financial crisis of 19992001 in Greece.
ISSN:0307-4358
1758-7743
DOI:10.1108/03074350810874433