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Company Stock Reactions to the 2016 Election Shock: Trump, Taxes and Trade


  • Alexander F. Wagner

    (University of Zurich, Centre for Economic Policy Research (CEPR), European Corporate Governance Institute (ECGI), and Swiss Finance Institute)

  • Richard J. Zeckhauser

    (Harvard University and National Bureau of Economic Research (NBER))

  • Alexandre Ziegler

    (University of Zurich)


Donald Trump’s election was a significant surprise. The reaction of company stock prices to the election reflects shifts in investor expectations about economic growth, taxes, and trade policy. High-beta stocks outperformed, presumably due to strengthened growth expectations. Expectations of significant corporate tax cuts boosted high-tax firms, but hurt firms with significant net operating loss carryforward balances. Investors currently perceive the climate to be more favorable for domestically-oriented companies than those with substantial foreign involvement. Markets incorporated expectations on growth and tax policy into stock prices relatively quickly; they took more time to digest the consequences of shifts in trade policy.

Suggested Citation

  • Alexander F. Wagner & Richard J. Zeckhauser & Alexandre Ziegler, 2017. "Company Stock Reactions to the 2016 Election Shock: Trump, Taxes and Trade," Swiss Finance Institute Research Paper Series 17-06, Swiss Finance Institute.
  • Handle: RePEc:chf:rpseri:rp1706

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    Cited by:

    1. Yi Huang & Chen Lin & Sibo Liu & Heiwai Tang, "undated". "Trade Linkages and Firm Value: Evidence from the 2018 US-China “Trade War”," IHEID Working Papers 11-2018, Economics Section, The Graduate Institute of International Studies.
    2. repec:eee:soceco:v:74:y:2018:i:c:p:38-56 is not listed on IDEAS
    3. repec:eee:phsmap:v:512:y:2018:i:c:p:241-247 is not listed on IDEAS

    More about this item


    Stock returns; event study; corporate taxes; trade policy; corporate interest payments; post-news drift; election surprise;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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