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Article
Publication date: 13 October 2020

Carlos Colón De Armas, Javier Rodriguez and Herminio Romero

This study examines the influence of the presidential elections on the behaviour of US investors according to the trading activity of two of the most popular investment vehicles…

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Abstract

Purpose

This study examines the influence of the presidential elections on the behaviour of US investors according to the trading activity of two of the most popular investment vehicles: exchange-traded funds and close-ended funds.

Design/methodology/approach

Based on the fact that investors in these two investment vehicles differ by, at least, two demographic factors that influence investment decisions, age and labour status, inferences are made about the degree of interest and the amount of trading activity that presidential elections provoke.

Findings

The evidence demonstrates that, during the last four US presidential elections, exchange-traded funds' investors trade significantly more than close-ended funds' investors during several event windows centred on the day of an election in which a republican candidate is elected. Close-ended funds' investors are more active during the election of a democratic candidate, although the statistical evidence in that regard is weak. Thus, it appears reasonable to conclude that younger investors who are gainfully employed are induced to trade by a presidential election in which a republican candidate prevails. Apparently, a democratic victory does not provoke the same behaviour.

Originality/value

Although the relation between politics and economics is not an unexplored topic, it is not clear whether the presidential elections themselves constitute an event that triggers the trading behaviour of investors.

Details

Journal of Economic and Administrative Sciences, vol. 37 no. 4
Type: Research Article
ISSN: 2054-6238

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Article
Publication date: 9 October 2017

Carlos Colón-De-Armas, Javier Rodriguez and Herminio Romero

The purpose of this paper is to examine the shifts in investor sentiment around the last seven US presidential elections (1988 through 2012).

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Abstract

Purpose

The purpose of this paper is to examine the shifts in investor sentiment around the last seven US presidential elections (1988 through 2012).

Design/methodology/approach

Investor sentiment is measured by changes in closed-end funds discounts, and the results are corroborated with three robustness tests, including an alternate measure of investor sentiment obtained from the survey conducted by the American Association of Individual Investors.

Findings

Closed­end funds discounts are significantly diminished from two weeks before a US presidential election to a week before the election, and persist until the week after the election, suggesting an increase in investors’ optimism during that period, particularly when a Democrat is elected president. More than the particular party prevailing, however, investors appear to be more interested in avoiding the entrenchment of power since the results suggest that they become optimistic when a change in the ruling party takes place, but become pessimistic when there is power continuity in the White House. The increase in investor optimism that is observed around the time of US presidential elections is not replicated during non-election years, which seems to corroborate that the elections are indeed driving the results.

Originality/value

This paper is the first to formally examine the relation between investor sentiment and US presidential elections using closed-end funds discounts as the measure for sentiment.

Details

Review of Behavioral Finance, vol. 9 no. 3
Type: Research Article
ISSN: 1940-5979

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Book part
Publication date: 30 August 2019

Md. Nazmul Ahsan and Jean-Marie Dufour

Statistical inference (estimation and testing) for the stochastic volatility (SV) model Taylor (1982, 1986) is challenging, especially likelihood-based methods which are difficult…

Abstract

Statistical inference (estimation and testing) for the stochastic volatility (SV) model Taylor (1982, 1986) is challenging, especially likelihood-based methods which are difficult to apply due to the presence of latent variables. The existing methods are either computationally costly and/or inefficient. In this paper, we propose computationally simple estimators for the SV model, which are at the same time highly efficient. The proposed class of estimators uses a small number of moment equations derived from an ARMA representation associated with the SV model, along with the possibility of using “winsorization” to improve stability and efficiency. We call these ARMA-SV estimators. Closed-form expressions for ARMA-SV estimators are obtained, and no numerical optimization procedure or choice of initial parameter values is required. The asymptotic distributional theory of the proposed estimators is studied. Due to their computational simplicity, the ARMA-SV estimators allow one to make reliable – even exact – simulation-based inference, through the application of Monte Carlo (MC) test or bootstrap methods. We compare them in a simulation experiment with a wide array of alternative estimation methods, in terms of bias, root mean square error and computation time. In addition to confirming the enormous computational advantage of the proposed estimators, the results show that ARMA-SV estimators match (or exceed) alternative estimators in terms of precision, including the widely used Bayesian estimator. The proposed methods are applied to daily observations on the returns for three major stock prices (Coca-Cola, Walmart, Ford) and the S&P Composite Price Index (2000–2017). The results confirm the presence of stochastic volatility with strong persistence.

Details

Topics in Identification, Limited Dependent Variables, Partial Observability, Experimentation, and Flexible Modeling: Part A
Type: Book
ISBN: 978-1-78973-241-2

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Book part
Publication date: 23 June 2022

Fernando Armas Asín and Martin Monsalve Zanatti

From the perspective of business history, this chapter presents an overview of the development of the tourism sector in South America, placing special emphasis on the Peruvian…

Abstract

From the perspective of business history, this chapter presents an overview of the development of the tourism sector in South America, placing special emphasis on the Peruvian case. The chapter explores various topics related to the tourism chain, such as hotel networks, the role of the state, tour operators, micro- and small enterprises, linkages between tourism and sustainability, the formation of clusters in the sector, and interactions between different entrepreneurs in the chain. Special emphasis is placed on the Peruvian case, especially when it comes to discussing the role of micro- and small enterprises in the sector.

Details

The Emerald Handbook of Entrepreneurship in Latin America
Type: Book
ISBN: 978-1-80071-955-2

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Article
Publication date: 24 May 2018

Philipp Hendrik Steiner and Peter Maas

The purpose of this paper is to show antecedents of customers’ information disclosure in the insurance industry and demonstrate central levers that foster customers’ information…

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Abstract

Purpose

The purpose of this paper is to show antecedents of customers’ information disclosure in the insurance industry and demonstrate central levers that foster customers’ information disclosure to companies in the insurance sector.

Design/methodology/approach

A conceptual model is presented, which is empirically tested with 3,494 insurance customers from ten counties with structural equation modelling and multi-group analysis.

Findings

Customer value in the insurance industry consists of three factors (customer value provided by the company, the agent, and the product) and affects information disclosure directly and indirectly (via satisfaction and trust).

Research limitations/implications

Antecedents of customers’ information disclosure in the insurance industry were identified. Moreover, the authors show that, in line with resource exchange theory, customers are willing to disclose personal and behavioral data to an insurance company in exchange for lower premiums or additional services.

Practical implications

Customers expect benefits in exchange for their personal data. In combination with new technologies (e.g. smartphones or wearables), companies can offer tailored products to their customers and can create a win -win situation for customers as well as insurance companies.

Originality/value

The paper identifies the antecedents of customers’ information disclosure in the insurance industry with a conceptual model. This model is tested in ten countries and offers insights in established (e.g. USA) as well as emergent markets (e.g. Brazil).

Details

International Journal of Bank Marketing, vol. 36 no. 6
Type: Research Article
ISSN: 0265-2323

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