Politicization of the Supreme Court and Firm Value: Evidence from Ruth Bader Ginsburg’s Death

54 Pages Posted: 1 Nov 2023

See all articles by Tor-Erik Bakke

Tor-Erik Bakke

University of Illinois at Chicago - Department of Finance

Hamed Mahmudi

University of Delaware - Department of Finance

Aazam Virani

University of Arizona - Department of Finance

Song Zhang

University of Delaware - Department of Finance

Date Written: October 4, 2023

Abstract

We exploit the sudden passing of justice Ruth Bader Ginsburg (RBG) – an event that signaled a more conservative Supreme Court of the US (SCOTUS) – to examine the impact of a change in the partisan composition of the SCOTUS on firm value. Consistent with a more conservative SCOTUS, we find that Republican-leaning firms exhibit more positive abnormal announcement returns around RBG's passing. This result is driven by industry-level political preferences. Republican-leaning firms located in Republican-controlled states exhibit more positive returns. Firms facing more political risk exhibit lower announcement returns, consistent with an increase in economic policy uncertainty following RBG’s passing.

Keywords: supreme court, shareholder value, political risk, political economy

JEL Classification: G38, K40, P48, D72

Suggested Citation

Bakke, Tor-Erik and Mahmudi, Hamed and Virani, Aazam and Zhang, Song, Politicization of the Supreme Court and Firm Value: Evidence from Ruth Bader Ginsburg’s Death (October 4, 2023). Available at SSRN: https://ssrn.com/abstract=4592480 or http://dx.doi.org/10.2139/ssrn.4592480

Tor-Erik Bakke

University of Illinois at Chicago - Department of Finance ( email )

2431 University Hall (UH)
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HOME PAGE: http://https://sites.google.com/site/tebakke/

Hamed Mahmudi

University of Delaware - Department of Finance ( email )

Alfred Lerner College of Business and Economics
Newark, DE 19716
United States

Aazam Virani (Contact Author)

University of Arizona - Department of Finance ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

Song Zhang

University of Delaware - Department of Finance ( email )

Alfred Lerner College of Business and Economics
Newark, DE 19716
United States

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