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The market value of political alignment: Recent U.S. evidence

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  • Hafeez, Bilal
  • Tosun, Onur Kemal
  • Eshraghi, Arman

Abstract

Examining publicly-listed U.S. firms, we illustrate investor reactions to the removal of the SEC’s nonpartisan Enforcement Director’s authority on March 10, 2025. Over the subsequent three days, Republican-leaning firms gain an average of around $139 million in market value, representing 2.5% of the median firm market cap in our sample. We show equity investors reward alignment with the incumbent administration while imposing no penalty for misalignment. These findings are more pronounced when a firm’s CEO and CFO are both Republican-leaning, highlighting the role of political alignment in market valuations, particularly in times of regulatory restructuring.

Suggested Citation

  • Hafeez, Bilal & Tosun, Onur Kemal & Eshraghi, Arman, 2026. "The market value of political alignment: Recent U.S. evidence," Finance Research Letters, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:finlet:v:100:y:2026:i:c:s1544612326002886
    DOI: 10.1016/j.frl.2026.109758
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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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