Abstract
This paper studies the association between the market's expectations of Saddam Hussein's fall from power, as reflected in "Saddam contract" prices, and stock prices, oil prices and exchange rates. During the war, a rise in the probability of Saddam's fall, which also indicated a speedy end to the war, was positively and significantly associated with stock prices, strengthened the dollar against the Euro, and lowered oil prices. Before the war, a rise in the probability of Saddam's fall, which may also have indicated the probability of a costly war breaking out, lowered stock prices, which adjusted gradually to this information.
| Original language | English |
|---|---|
| Pages (from-to) | 1185-1200 |
| Number of pages | 16 |
| Journal | Journal of Banking and Finance |
| Volume | 28 |
| Issue number | 5 |
| DOIs | |
| State | Published - May 2004 |
| Externally published | Yes |
Bibliographical note
Funding Information:Amihud is Ira Leon Rennert Professor of Entrepreneurial Finance. We thank an anonymous referee for helpful comments and suggestions and Mr. John Delaney, CEO of Tradesports, for providing the data. We acknowledge partial financial support by the Israel Institute for Business Research, Faculty of Management, Tel Aviv University.
Funding
Amihud is Ira Leon Rennert Professor of Entrepreneurial Finance. We thank an anonymous referee for helpful comments and suggestions and Mr. John Delaney, CEO of Tradesports, for providing the data. We acknowledge partial financial support by the Israel Institute for Business Research, Faculty of Management, Tel Aviv University.
| Funders | Funder number |
|---|---|
| Israel Institute for Business Research, Faculty of Management, Tel Aviv University |
Keywords
- Political risk
- War and exchange rates
- War and the stock market