Stocks' prices manipulation around national elections? An event study for the case of Greek banking sector

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    Abstract

    Purpose-The purpose of this paper is to examine the influence of major non-economic events such as the results of five 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 five Greek national Parliamentary elections during the 1996-2009 period had no statistically significant 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 significant at 5 and 10 per cent confidence levels. Findings-Investors were not surprised and the political information caused no change and no influence 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 significant 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 significant 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.

    Original languageEnglish
    Pages (from-to)248-256
    Number of pages9
    JournalJournal of Financial Crime
    Volume23
    Issue number2
    DOIs
    Publication statusPublished - 2016

    Keywords

    • Banks
    • Efficient markets
    • Event study
    • Greece
    • Stock returns

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