The impact of political uncertainty on institutional ownership

This paper provides original evidence from institutional investors that political uncertainty greatly affects investment behavior. Using holdings of common stock, we find institutions significantly reduce their by 0.8–2.3% points during presidential election years. Such effect holds for gubernatorial elections with cross-state-border difference-in-difference analysis and tests using a index. The is the opposite American Depository Receipts (ADRs). In addition, benefit financially observed strategy, such strategy in line predicted outcomes polls.