This paper provides original evidence from institutional investors that political uncertainty greatly affects investment behavior. Using institutional holdings of common stock, we find that institutions significantly reduce their holdings 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 for tests using a political uncertainty index. The effect is the opposite for American Depository Receipts (ADRs). In addition, we find that institutions benefit financially from the observed strategy, and such strategy is in line with predicted outcomes of presidential election polls.

本文提供了机构投资者的原始证据，表明政治不确定性极大地影响了投资行为。使用机构持有的普通股，我们发现机构在总统选举期间显着减少了 0.8-2.3% 的持股。这种效应适用于具有跨州边界差异分析的州长选举和使用政治不确定性指数的测试。美国存托凭证 (ADR) 的效果正好相反。此外，我们发现机构从观察到的策略中获得经济利益，并且这种策略与总统选举民意调查的预测结果一致。