Who Fears the Far Right? Aggregate and FirmLevel Evidence from Three Western European Stock Markets

Abstract

This research analyses the reaction of the Finnish, Austrian and Italian markets during the negotiations that led to the far-right’s entry into their governments. Using the event study methodology and by focusing on abnormal returns, different significant reactions are found at an aggregate level. One noteworthy result is the negative abnormal returns associated to bad news for European Union stability. The firm-level analysis confirms this evidence and highlights some determinants of the variability of returns in the crosssection: most notably the role of the business relationship with the EU when explaining the differences between winners and losers