Presidential elections and stock market outcomes : an event-study on the effect of Turkey's Presidential Elections on Borsa Istanbul

This paper uses the event-study methodology to investigate the effect of the Presidential Turkish elections in 2023 on Borsa Istanbul returns. The data used in this study cover the period from 13 June 2022, through 7 June 2023. We employ a market model to study the effect of two election rounds on the stock market's cumulative abnormal returns (CARs). Our results show that the impact of the first round of the elections on the stock market is mixed, as it has a positive effect on CARs for event windows [-2, 2] and a negative impact on CARs for event windows [-6, 6] and [7, 7]. However, following round 2 of the elections, results show that re-elections have a significant positive impact on CARs, with average CARs ranging from 678 basis point to 1019 basis point, indicating that uncertainty in the market has vanished and perhaps investors are optimistic about the future of Erdogan reign and his expected economic policies. Results also show that sectors' returns reacted differently to the first round of the elections and round 2 of the re-elections. For example, the event has a significant negative effect on most of the sectors' returns during the first presidential elections. In contrast, it has a significant positive impact on most of the sectors' returns during round 2 re-elections.