DISSERTATION

A stock market-based political factor

08/05/2020

Rui Terra Neto

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Advisor: Carlos Viana de Carvalho

Co-advisor: Ruy Monteiro Ribeiro

Examiners: Eduardo Zilberman, Marcelo Medeiros, Felipe Farah Schwartzman.

We show that a political factor that exploits cross-sectional variation in individual stock returns can forecast national election results, including net house seat gains and the president. Using US presidential elections since 1928, we also find that this long-short portfolio constructed around the election period delivers information on presidential approval for a long period after the election

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