We employ panel data from the Economist Intelligence Unit, covering more than 65 countries, to assess the impact of their Democracy Index on the stock market performance. This index is measured by the level of government functionality, civil liberties, political participation, and other related factors. Our analysis demonstrates an inverse relationship between Democracy Index and stock market performance. Our results exhibit robustness when clustered for countries' characteristics. We posit that a larger degree of democracy correlates with increased scrutiny and unreciprocated excessive accountabilities within financial markets, leading to inefficiencies. Furthermore, we illustrate how key constitutional factors impact democracies, consequently influencing stock market returns and volatility. This study holds significance due to the substantial heterogeneity among countries concerning democracy, as only 5.7% of the world's population resides in a full democracy. Collectively, the level of democracy emerges as a pivotal determinant in the examination of global financial markets, incurring associated costs.

我们采用经济学人智库覆盖超过 65 个国家的面板数据来评估其民主指数对股市表现的影响。该指数通过政府职能水平、公民自由、政治参与和其他相关因素来衡量。我们的分析表明民主指数与股市表现之间存在反比关系。当针对国家特征进行聚类时，我们的结果表现出稳健性。我们认为，更大程度的民主与金融市场内日益严格的审查和无回报的过度责任相关，从而导致效率低下。此外，我们还说明了关键的宪法因素如何影响民主，从而影响股市回报和波动性。这项研究具有重要意义，因为各国在民主方面存在很大差异，因为世界上只有 5.7% 的人口生活在完全民主的国家。总的来说，民主水平成为审查全球金融市场的关键决定因素，并产生相关成本。