Fiscal Stimulus Matters to Market

8.January 2021

Fiscal stimulus measures have become a hot topic in the financial markets. However, that is not surprising, since fiscal stimulus is a crucial government method to ease the pandemic crisis’s impacts. Therefore, the investors and market are very sensitive to this topic, and they react to the fiscal stimulus and any related news very sharply. While it is intuitive that the withdraw of the stimulus measures will negatively affect the markets and markets will fall, the magnitude of these falls is unknown. Novel research by Chan-Lau and Zhao (2020), quantifies the impacts of withdrawals and it’s effects on the stock markets worldwide. The reactions are especially negative if the fiscal stimulus is withdrawn “too soon”. According to the authors, too soon is when the number of daily COVID cases is high compared to the recent past.

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Top Ten Blog Posts on Quantpedia in 2020

1.January 2021

Once again, let us use the turn of the year for a short recapitulation of posts on our blog. Apart from other things we do (which we will summarize in our next blog post in a few days), we have published around over 50 short blog posts / recherches of academic papers on this blog during the last year. We want to use this opportunity to summarize 10 of them, which were the most popular (based on Google Analytics tool). Maybe you will be able to find something you have not read yet …

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Senators vs Santa’s Reindeer

29.December 2020

During the festive season, everything is more relaxed, and this week´s blog is no exception. The stock-picking abilities of animals are not the main research topic for most academics, yet the stock-picking skills, for example, of monkeys, were previously documented. To our best knowledge, the paper of Belmont et al. (2020) is the first that examines the stock-picking abilities of reindeer. Moreover, the performance of reindeer is compared to the US senators during 2020. Trading of US senators or congresspeople is particularly interesting since there are concerns about informed stock trading. Especially during the COVID pandemic, where the governments have a significant influence on the economies. The finding of the paper is that the performance of the senate is behind reindeer. However, the reindeer exhibit herding behavior and momentum preferences. Perhaps, their abilities should be examined more deeply during a more extended period.

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Large Cap Analysis

23.December 2020

Every week, through these posts, we point to interesting academic research papers. This week´s blog is slightly different, yet no less engaging. This blog includes numerous interesting charts from more than hundred charts in the CUSTOM REPORT: U.S. LARGE INDEX by the PHILOSOPHICAL ECONOMICS using OSAM Research Database. The report consists of the visually presented analysis of the U.S. Large index. The analysis includes the composition, returns, individual stocks, sector and factor allocations, and six fundamentals. The report contains comprehensive information about the large caps in the U.S. market from 1963 to 2020 and is worthy of a look.

We wish you all Merry Christmas …

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ESG and CEO Turnover

19.December 2020

ESG scores are already well-established, and nobody doubts that the scores affect investors or companies. Investors seem to care more and more about the other aspects of the stocks and not just the profits – the human welfare, ecology or social aspects of our lives. Additionally, numerous researches point out that the ESG scores can positively affect also the portfolios. However, the novel research by Colak et al. (2020), has examined other implications of the ESG scores: how the ESG affect the CEOs. To be more precise, how the adverse ESG events and subsequent negative media attention affects the longevity of the CEOs. The finding is that negative event significantly increase the probability of the CEO being replaced. Overall, the research paper highlights the importance of ESG scores in the corporate world.

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