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How do financial markets price political uncertainty? Evidence from the 2024 United States presidential election

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  • Flynn, Matthew
  • Tarkom, Augustine

Abstract

This study examines the relationship between perceived election outcomes and financial markets by analyzing the unique case of a United States presidential candidate with direct corporate interests. Focusing on Donald Trump's media company (DJT) and his 2024 presidential election odds from betting markets, we document robust evidence of market interdependence across multiple empirical specifications. Our findings reveal that while betting markets efficiently incorporate new political information, financial markets demonstrate systematic delays in price adjustment, suggesting the presence of information processing frictions. These results provide novel insights into the differential speed and efficiency of political information processing across market types.

Suggested Citation

  • Flynn, Matthew & Tarkom, Augustine, 2025. "How do financial markets price political uncertainty? Evidence from the 2024 United States presidential election," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001448
    DOI: 10.1016/j.frl.2025.106879
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial markets; Betting markets; Elections; Market efficiency;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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