POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH

Al Amin; Raihan Sobhan

doi:10.17261/Pressacademia.2026.2043

POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH

Abstract

Purpose - This study examines whether political affiliation influences stock market reactions to national elections in an emerging economy like Bangladesh. It investigates how firms affiliated with the Bangladesh Nationalist Party (BNP), the victorious party, respond to the most recent national election. Given the close ties between business and politics in Bangladesh, the election provides a natural setting to assess how political information is incorporated into stock prices. Methodology - Using an event study methodology, the study analyzes daily stock returns of 21 BNP-affiliated firms and a matched sample of 21 non-affiliated firms listed on the Dhaka Stock Exchange. Non-affiliated firms are matched by industry and firm size to isolate the effect of political affiliation. Abnormal returns are estimated using the market model, and cumulative abnormal returns are calculated over short event windows around the election. To examine whether stock price reactions reflect changes in firm fundamentals, the study also analyzes quarterly EPS and NAV for BNP-affiliated firms in the two quarters preceding the election. Findings - The findings show that BNP-affiliated firms experience positive and statistically significant abnormal returns on the first trading day following the election and earn significantly higher cumulative abnormal returns than non-affiliated firms over short post-election windows. In contrast, non-affiliated firms exhibit no significant market reaction. Importantly, no significant changes are observed in EPS or NAV prior to the election, suggesting that the stock price reaction is not driven by contemporaneous improvements in firm performance. Conclusion - The results indicate that investors capitalize expected political benefits into stock prices following a decisive election outcome. The study contributes to the literature on political connections by providing firm-level evidence from Bangladesh and highlighting the role of political affiliation in shaping investor expectations in emerging capital markets.

Keywords

References

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Details

Primary Language

English

Subjects

Finance

Journal Section

Research Article

Authors

Al Amin ^* This is me
0009-0005-1314-7305
Bangladesh

Raihan Sobhan This is me
0000-0003-2015-8035
Bangladesh

Publication Date

June 30, 2026

Submission Date

February 12, 2026

Acceptance Date

May 23, 2026

Published in Issue

Year 2026 Volume: 13 Number: 1

DOI

https://doi.org/10.17261/Pressacademia.2026.2043

IZ

https://izlik.org/JA78HD94TS

Cite

RIS / Bibtex

APA

Amin, A., & Sobhan, R. (2026). POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH. Journal of Economics Finance and Accounting, 13(1), 67-75. https://doi.org/10.17261/Pressacademia.2026.2043

AMA

1.Amin A, Sobhan R. POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH. JEFA. 2026;13(1):67-75. doi:10.17261/Pressacademia.2026.2043

Chicago

Amin, Al, and Raihan Sobhan. 2026. “POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH”. Journal of Economics Finance and Accounting 13 (1): 67-75. https://doi.org/10.17261/Pressacademia.2026.2043.

EndNote

Amin A, Sobhan R (June 1, 2026) POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH. Journal of Economics Finance and Accounting 13 1 67–75.

IEEE

[1]A. Amin and R. Sobhan, “POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH”, JEFA, vol. 13, no. 1, pp. 67–75, June 2026, doi: 10.17261/Pressacademia.2026.2043.

ISNAD

Amin, Al - Sobhan, Raihan. “POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH”. Journal of Economics Finance and Accounting 13/1 (June 1, 2026): 67-75. https://doi.org/10.17261/Pressacademia.2026.2043.

JAMA

1.Amin A, Sobhan R. POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH. JEFA. 2026;13:67–75.

MLA

Amin, Al, and Raihan Sobhan. “POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH”. Journal of Economics Finance and Accounting, vol. 13, no. 1, June 2026, pp. 67-75, doi:10.17261/Pressacademia.2026.2043.

Vancouver

1.Al Amin, Raihan Sobhan. POLITICAL AFFILIATION AND ABNORMAL STOCK RETURNS AROUND ELECTIONS: AN EVENT STUDY FROM BANGLADESH. JEFA. 2026 Jun. 1;13(1):67-75. doi:10.17261/Pressacademia.2026.2043