IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v90y2026ics1544612325026248.html

Political corruption, regulatory red tape and stock returns

Author

Listed:
  • Ahmed, Shaker
  • Hossain, Ashrafee T.
  • Saadi, Samir

Abstract

We analyze how regulatory leniency under the Trump administration disproportionately affected firms in high-versus low-corruption states. Using an event study approach around Trump’s 2025 inauguration day, we report stronger market reactions for firms in corruption-prone states, reflecting anticipated rent-seeking opportunities. Further analysis shows that within the firms domiciled in states with higher corruption rates, smaller, growth-oriented, and underperforming firms benefited the most. By linking federal policy shifts to localized corruption dynamics, our findings reveal how politicized regulatory environments distort capital markets, privileging firms positioned to capitalize on institutional weaknesses.

Suggested Citation

  • Ahmed, Shaker & Hossain, Ashrafee T. & Saadi, Samir, 2026. "Political corruption, regulatory red tape and stock returns," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325026248
    DOI: 10.1016/j.frl.2025.109375
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325026248
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.109375?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325026248. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.