, Volume 4, Issue 1, pp 83–112

The effects of surprise political events on quoted firms: the March 2004 election in Spain

Open Access
Original Article

DOI: 10.1007/s13209-011-0080-5

Cite this article as:
Castells, P. & Trillas, F. SERIEs (2013) 4: 83. doi:10.1007/s13209-011-0080-5


In the last days of the electoral campaign for the 2004 general election in Spain, on Thursday March 11th 2004, a series of simultaneous terror attacks caused the death of 191 persons in commuting trains in the capital Madrid. Four days later, the opposition party won the election, against all predictions that were made prior to the terror attacks. This change in expectations presents a unique opportunity to take advantage of event study techniques to test some politico-economic hypotheses. The quantitative exercise is carried out employing Seemingly Unrelated Regressions (SUR). Hypothesis testing is improved by means of bootstrapping techniques. Convergence theories prove quite resilient as, jointly, quoted firms were not significantly affected by the election outcome. The impact on politically connected companies and particular economic sectors, however, suggest that a combination of capture and agency problems may play a role in explaining the effects of the change in expectations.


Event study Median voter Agency Capture Elections Political connections 

JEL Classification

G14 G15 

Copyright information

© The Author(s) 2011

This article is published under license to BioMed Central Ltd. Open Access This article is distributed under the terms of the Creative Commons Attribution License which permits any use, distribution and reproduction in any medium, provided the original author(s) and source are credited.

Authors and Affiliations

  1. 1.UK Government Economic ServiceLondonUK
  2. 2.Universitat Autònoma de Barcelona (UAB)Cerdanyola del VallésSpain
  3. 3.Institut d’Economia de Barcelona (IEB)BarcelonaSpain
  4. 4.IESE SP-SP CentreBarcelonaSpain

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