The Effects of 2016 U.S. Presidential Election on the Stock Exchange: Evidence from the U.S. Stock Market

The paper investigates the effects of the 2016 U.S. presidential election on U.S. stock market. We examine 47 announcements starting from when President Trump announced that he would run for the Presidential election using event study methodology. Furthermore, we conduct several robustness tests including Corrado ranking, Chesney non-parametric conditional distribution approach, market integration and the removal of firms with firmspecific news. We observe that the U.S. stock market was widely affected by the 2016 U.S. Presidential election whereby life insurance sector was one of the most negatively affected sectors due to President Trump's plan to replace Obamacare. In addition, our results show that the events around the most recent election can lead to diamond risk structures in which the largest diamond risk structure appeared around the event when President Trump secured his Republican presidential nomination.