Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Murat Binay

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Rights Information

(c) 2018 Aarushi Tibrewala


This paper studies if a change in political risk has a significant impact on the stock returns of countries. Additionally, the paper assesses if this change in political risk impacts stock returns differently in emerging and developed countries. The paper conducts a risk based portfolio analysis and a linear cross-sectional regression analysis in order to find a conclusive result. The portfolio analysis, which replicates a study carried out by Diamonte, Liew, and Stevens (1996), reveals that there is a difference in the impact that change in political risk has in developed and emerging countries. The regression analysis finds that change in political risk does impact stock returns but there is no statistically significant difference in this impact between emerging and developed countries. The regression analysis also finds that the existing level of risk does not significantly affect the impact that growth in political risk has on stock returns.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.