Premium
The role of political uncertainty in A ustralian financial markets
Author(s) -
Smales Lee A.
Publication year - 2016
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12107
Subject(s) - polling , financial market , politics , investment (military) , federal election , economics , monetary economics , political risk , finance , financial economics , political science , law , operating system , commission , computer science
Abstract Within the developed world, recent A ustralian political history is uniquely turbulent. This situation invokes indecision regarding investment decisions in both the real economy and the financial markets. This paper explores the relationship between uncertainty in A ustralian federal election polling and resulting financial market uncertainty. Empirical evidence suggests that increasing (decreasing) levels of uncertainty around the election result induce higher (lower) levels of uncertainty in financial markets. The effect is more pronounced as polling day approaches. Industry‐level analysis suggests that the base materials sector is most significantly affected by election uncertainty in Australia.