The effect of the political cycle on the Tehran Stock market trading volume and liquidity

Subject Areas : Journal of Investment Knowledge

Farhad Hanifi ¹ , Ghasem Gholamlou ²

1 - Assistant Professor of IAU, Tehran Central Branch
2 - M.A in Financial Management, IAU, Tehran Central Branch

Received: 2013-11-01 Accepted : 2014-03-11 Published : 2014-03-11

Keywords: stock exchange, political cycle, liquidity Index, trading volume,

Abstract :

This study examines the impact of political cycle on Tehran stock  Exchange performance. Political cycle is a four-year cycle that Is known to  political business cycle and   Presidential cycle. Political cycle theory shows  that stock returns  fall  during  the first  half  of a presidency, and  rise  during  the second  half  of a presidency .Also Stock market performance in different years from a government in USA  Indicated stock returns is lower in the second year than in other years .In this study, stock market performance is measured by Trading volume and  Liquidity Index. The research method is based on the goal, application and is based on the method  descriptive .we used two methods to collect data and content,library method and  Using the Exchange documents. The study used descriptive and inferential statistics. Statistical analysis was performed using SPSS software. The results of this research indicate that There is significant relationship Between the independent variable (Political cycle) and  dependent variables ( Trading volume and Liquidity Index ). In other words, there is significant difference between Thehran stock performance (Basis of  two  indicators) the first half and second  half of a presidency. Also, there is no significant difference between Thehran stock performance the different years of a presidency. In summary , this research shows Tehran Stock Exchange follow the political cycle.