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Source publication
Literature is scanty on the euphoria around Ghana’s electioneering activities and their impact on economic activities. This article studies electioneering activities and their impact on the Ghana Stock Exchange (GSE) returns. Literature have established that political risk is statistically significant in emerging stock markets and from 5 January to...
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Citations
... This research focuses on the relationship between election years and financial market Effect of elections on stock market performance, specifically examining selected markets in Africa. The African stock market is categorized as an emerging market (Tetteh and Arthur, 2020), comprising 29 exchanges and 32 members of the African Securities Exchange Association (ASEA). Bedemo (2023) explores the political economy of financial development: empirical evidence from Ethiopia. ...
... Despite this, Ghana has experienced five successful coups, which continue to have adverse effects on the country. In the last two decades, Ghana has held significant democratic elections (Tetteh and Arthur, 2020). The study of political turmoil in developing regions, such as Latin America and Africa, became a significant undertaking for both policymakers and academics, following a series of government and military overthrows. ...
... Investing in the stock market entails various risks, including political risks, exchange rate risks, cross-border capital flow risks and inflationary risks (Mnasri and Essaddam, 2021). As cited in Tetteh and Arthur (2020), it is well-established that political risk is statistically significant in emerging stock markets. Sottilotta (2012) explains political risk as any disruption in the business environment arising from political change, which could potentially impact a firm's profit or objectives. ...
Purpose
The performance of financial markets is significantly influenced by the political environment during general elections. This study investigates the effect of general elections on stock market performance in selected African markets.
Design/methodology/approach
Prior studies have been inconsistent in determining whether electioneering events negatively or positively influence stock market performance. The study utilized panel data set with annual observations from 1990 to 2020. The generalized method of moments (GMM) is employed to investigate the effect of electioneering and change in government on key stock market performance indicators, including stock market capitalization, stock market turnover ratio and the value of stock traded.
Findings
The study finds that electioneering activities generally have a positive impact on the performance of the stock market, whereas a change in government has a negative impact. As a result, the study recommends that stakeholders of the stock market remain vigilant and actively monitor electioneering events to devise and implement effective policies aimed at mitigating political risks during general elections. By adopting these measures, investor confidence can be significantly enhanced, fostering a more robust and secure investment environment.
Originality/value
The study investigates a neglected section of the literature by highlighting not only the effect of elections on stock market indicators but also possible change in government during elections.
