Suchergebnisse

This article examines the reasons some countries favor bank-based financial systems and others favor markets-based financial systems. We show that when societies are more accepting of ambiguity—and by extension are more trusting—market financing is favored over relationship-based collateral financing by banks.

Using electronic-markets data, this paper investigates partial determinants of change in Graham's price-earnings ratios (P/E) during US presidential election cycles. We document evidence over six elections, that as the probable winner of the election becomes clearer, markets surprisingly respond with decreases in P/E ratios. We consider that our results are consistent with rational markets reacting to presidential campaigns focused on influencing biased, sociotropic voters. These results should be of great interest to researchers concerned with market reaction to election cycles, public policy, and the overall role of election uncertainty in financial markets. Adapted from the source document.