Does the U.S. President Affect the Stock Market?

Maurizio Montone

Research output: Contribution to conferencePaperAcademic


I find that in a world with asymmetric information and short-sale constraints, sentiment and disagreement over political outcomes should play a key role in determining asset prices. Consistent with the model’s predictions, I show that in the U.S. (1) higher political sentiment and disagreement are both followed by lower stock returns; (2) the two effects interact with each other, as positive (negative) sentiment offsets (reinforces) the impact of disagreement; and (3) disagreement increases when the President engages in opportunistic behavior. The paper also yields new insights on Santa-Clara and Valkanov’s (2003) presidential puzzle.
Original languageEnglish
Publication statusPublished - 2014

Bibliographical note

Presented at VU University Amsterdam, the University of Sussex Young Finance Scholars' Conference, Erasmus Research Institute of Management, and the "CIdE" 1st Workshop in Econometrics and Empirical Economics.


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