News and Stock Markets: Abnormal Returns on the US Market
| Author: | Bc. Ondřej Rosický |
|---|---|
| Year: | 2020 - summer |
| Leaders: | prof. PhDr. Petr Teplý Ph.D. |
| Consultants: | |
| Work type: | Bachelors |
| Language: | English |
| Pages: | 88 |
| Awards and prizes: | |
| Link: | https://is.cuni.cz/webapps/zzp/detail/214330/ |
| Abstract: | This thesis examines how the U.S. stock market responses to the results of 2016 Presidential elections in the United States. The sample of 11 companies is selected as a representative of each sector of economy. The abnormal returns are measured for the primary and general elections. The companies’ value is calculated and its relationship with the abnormal returns results is tested. Firstly, the impact of results of Super Tuesday is computed with the methodology of abnormal returns. The results do not show any significant abnormal returns. On the other hand, the results of general elections in November show significant impact on stock market. Average abnormal returns are negative, but some sectors (financial, energy, industrial) show positive abnormal returns. Significantly negative abnormal returns appear for cumulative average effect of first three days after elections as well. The results are mostly similar to ones obtained in initial measurement. This similarity indicates that there is no correction of the market of initial behavior of investors in stock market and that the first day does not evoke any excessive reaction. Secondly, the relationship between price, value and abnormal returns is examined. The results show that there is no significant relationship between the correctness of the stock price and abnormal returns occurring after November general elections in 2016. |
