Study: Market has measurable influence on shareholders’ votes
The market can influence how people who own shares vote in U.S. presidential elections, a new study by Rice University and University of Pittsburgh examining the electoral implications of stock fluctuations finds.
The big picture: The study compares electoral preferences with levels of dividend income. It finds the effect of recent stock returns on votes for the incumbent party is stronger in counties with greater market participation. And it suggests that if the market had rebounded instead of falling in 2008, Republican presidential candidate John McCain may have won the states of Florida, Indiana, North Carolina, and Ohio.
What they're saying: Alan Crane, a finance professor at Rice, told Bloomberg Sunday that if you’ve got a large amount of money invested in shares during a rising stock market "you’re going to support that incumbent party, because that’s good for you personally. "You have an opportunity for politicians to cater through this particular channel," he said.
Yes, but: The study does not definitively state that the market has a direct impact on election outcomes. As Bloomberg notes, "incumbent Democrats were booted out in 2000 after one of the biggest rallies ever."
Read the study: