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Happy Holidays? Evidence from Chinese Stock Exchanges

Published online by Cambridge University Press:  22 April 2024

Margaret A. T. Kenney Open the ORCID record for Margaret A. T. Kenney [Opens in a new window]
Margaret A. T. Kenney*
Affiliation:
Political Science, University of California Berkeley, Berkeley, CA, USA
*
Email: margaret_kenney@berkeley.edu
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Abstract

There is a consensus in the finance literature that stock markets generally perform well ahead of holidays. However, I argue that this relationship does not hold in the Chinese context, given that public holidays are associated with increased collective action and repression. I propose two possible mechanisms: (1) Chinese investors take cues from the political environment and will thus act more conservatively in the market prior to public holidays or (2) the government increases intervention to stabilize the stock market during these periods. I test this relationship using daily stock exchange data from Shanghai and Shenzhen. In addition, I corroborate the theoretical mechanism by testing whether there is similar conservatism before focal points on the dissident calendar. This research note contributes to our understanding of the Chinese investment market and raises general questions about the representativeness of the finance literature. In addition, this research speaks to the costs of authoritarianism and preserving social stability in these contexts.

Keywords

Chinese stock exchangesprotestdissident calendarcollective actioninvestment
Type
Research Article
Information
Business and Politics , First View , pp. 1 - 12
Copyright
© The Author(s), 2024. Published by Cambridge University Press on behalf of Vinod K. Aggarwal

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