Political Attitudes and Equity Market Reactions to Vaccine Mandate Bans

74 Pages Posted: 28 Mar 2023 Last revised: 1 Feb 2024

See all articles by Michael J. Cooper

Michael J. Cooper

University of Utah - David Eccles School of Business

Fan Li

University of Utah - Department of Finance

Tim Liu

University of Utah - David Eccles School of Business

Yihui Pan

University of Utah - Department of Finance

Date Written: March 18, 2023

Abstract

We study equity market reactions to states laws banning COVID-19 vaccine mandates and find a 0.64% increase in abnormal returns to affected firms around law passage, compared to unaffected firms. The positive market reaction concentrates in firms with a Republican workforce, especially if they face tight local labor markets or have Democratic leadership. Firms with a Democratic workforce experience mildly negative market reactions, especially in tight labor markets. Establishments impacted by bans experience greater employment growth after the passage of the bans. Our findings suggest that regulations aligned with workers’ preferences may ameliorate labor adjustment costs to benefit firm value.

Keywords: Non-monetary Preferences, Cultural friction, Labor Adjustment Cost, Return-to-work

JEL Classification: G38, J18, J32

Suggested Citation

Cooper, Michael J. and Li, Fan and Liu, Tim and Pan, Yihui, Political Attitudes and Equity Market Reactions to Vaccine Mandate Bans (March 18, 2023). Available at SSRN: https://ssrn.com/abstract=4392508 or http://dx.doi.org/10.2139/ssrn.4392508

Michael J. Cooper

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Fan Li

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

HOME PAGE: http://https://eccles.utah.edu/team/fan-li/

Tim Liu (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Yihui Pan

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

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