Lame Duck Presidency and Stock Returns

43 Pages Posted: 3 Feb 2016

See all articles by Youngsoo Kim

Youngsoo Kim

University of Regina

Jung Chul Park

University of South Florida

Date Written: February 1, 2016


Recent studies highlight positive effect of political connections on firm performance and stock returns. This paper shows that the positive effect of political connections on the cross-sectional stock returns disappears in the lame duck presidency period, defined as the last two years before the Presidential party change. Additional tests suggest that the diminishing political effect in the lame duck period is more pronounced during the Republican presidency and the last two years of the first term presidency. The results are driven by the firms located in the states where residents more strongly support the president, by small firms, who typically do not have financial resources to hedge away political risks, and by firms in the consumer goods, sales, and manufacturing industries.

Keywords: Political geography, political connections, policy risk, returns, performance, lame duck

JEL Classification: G10, G11, G14, D70, H10

Suggested Citation

Kim, Youngsoo and Park, Jung Chul, Lame Duck Presidency and Stock Returns (February 1, 2016). Available at SSRN: or

Youngsoo Kim

University of Regina ( email )

3737 Wascana Parkway
Regina, Saskatchewan S4S OA2 S4S 0A1
(306) 585-5647 (Phone)

Jung Chul Park (Contact Author)

University of South Florida ( email )

Tampa, FL 33620
United States
813-974-9680 (Phone)
813-974-3084 (Fax)


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