* Based on a recent study, you might wanna call your broker and buy some stock in Illinois-based companies this morning. Crain’s…
The study looked at 388 state of the state speeches between 2002 and 2010, along with data on 5,271 publicly traded firms, including 211 in Illinois. Software called Diction 6.0 counted the positive and negative words in the speeches and scored them for net optimism, certainty and activity.
“The results show that firms that are located in a state where the governor gives a more optimistic speech are more likely to significantly increase investment and employment, and experience higher abnormal returns, relative to similar firms located in a neighboring state,” the study concluded.
In 2005, for example, former Gov. Rod Blagojevich’s state of the state speech scored 26.45 for net optimism, twice the nine-year average for all speeches nationwide. Illinois stocks beat the market by 1.59 percent that week, according to the study. In the 2010 election year, Mr. Quinn’s speech scored only 6.61 for net optimism, and the state’s stocks fell 0.5 percent.
The study controlled for variables such as the size of companies, the health of a state’s economy and even the possibility of media leaks before the speeches — leaving the speech itself the only variable.
“I was really surprised by the results,” said Larry Fauver, another co-author and associate professor of finance at University of Tennessee in Knoxville. “Most people are skeptical. I’m comfortable saying the correlation is 100 percent.”
The market react was supposedly even stronger in election years.