In Sickness and in Wealth: The Impact of Leaders' Health on Markets

We study the effect of head of states' health on markets. We collect data on unexpected exits from office to determine whether these exits affect stock market returns across countries between 1923 and 2015. Health problems precede almost all unexpected exits. Unexpected exits lead to about 1% abnormal return, due mainly to extreme positive jumps following exits of autocrats and non-college leaders. To identify citizens' awareness of a leader's health problems, we collect data on rumors about health issues emerging prior to the leader's exit. The start of rumors generates about 1% negative abnormal returns. The health of leaders matters.