Authors
Javier Mella
Published in
PloS one. Volume 21. Issue 10. Pages e0359627. Epub Oct 30, 2026.
Abstract
This study examines how partisan politics affects stock returns in Latin American countries characterized by strong presidential regimes. Using firm-level data, we show that the widely documented Democratic Party premium in the United States does not extend to this setting. Instead, stock returns are highest under centrist governments, while elections won by left-wing candidates trigger negative market reactions. Beyond the traditional left-right dimension, we introduce a novel religious classification of political parties. We find that markets perform significantly better when presidents are affiliated with Christian parties, with higher average returns and positive abnormal returns following electoral victories. These effects are accompanied by lower measures of risk and higher profitability, suggesting that the superior performance is not driven by risk premium but rather by improved expected cash flows and market underreaction to political outcomes. Overall, the results indicate that partisan effects on stock returns depend on institutional context and extend beyond the conventional ideological spectrum. The findings highlight the economic relevance of political religiosity and provide new evidence that financial markets respond systematically to political characteristics in strong presidential systems.
PMID:
42961982
Bibliographic data and abstract were imported from PubMed on 31 Oct 2026.
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