Political Attitudes and Equity Market Reactions to Vaccine Mandate Bans

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: 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