U.S. Presidential news coverage: Risk, uncertainty and stocks
Year: 2025
Type: article
Abstract: By measuring the frequency of risk and uncertainty synonyms adjacent to mentions of sitting U.S. Presidents in news articles, this study introduces the Presidential Uncertainty and Risk (PUR) index. The index displays distinctive spikes during pivotal events such as presidential elections, presidential debates, and military conflicts, thus capturing signals relevant to investors gauging political risk and uncertainty. This robust pattern is consistent across different Presidential administrations, irrespective of the incumbent President's political party. Firms featured in PUR-news articles attract the attention of both retail and institutional investors. Moreover, a unit increase in the standard deviation of the frequency of words connotating risk and uncertainty is associated with an economically significant 21.3 basis points decrease in abnormal stock returns over the month following the news. These findings suggest that heightened political risk and uncertainty affect both investor attention and stock performance.
Authors: Kam Fong Chan, Lee A. Smales
Institutions: The University of Western Australia, Taylor's University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,930
OpenAlex ID: W4407098713