Lecturer, Faculty of Management, Tribhuvan University, Public Youth Campus, Kathmandu-22, Nepal
Online published on 13 February, 2014.
The paper examines the interrelationship between the government leadership and stock returns in Nepal between mid-July 1997 and mid-July 2012. The liberal democrats Nepali Congress-led governments have generated positive, higher returns, whereas the UCPN (Maoist)-led governments have earned highest negative returns. Similarly, the study finds that the stock returns are lower during the governments led by communist (leftist), and by Rastiya Prajatantra Party (RPP), the rightist force. The study also finds statistically significant returns between the governments led by Nepali Congress, communist parties and other political parties. It indicates that the political force leading the government influences the Nepalese stock market returns. Hence, there exists a strong relationship between the government-leadership and stock returns in the Nepalese stock market.
