Political elections and market reactions: The ‘Trump effect’ on green stocks

Simona Cosma, Stefano Cosma, Luca Gambarelli, Daniela Pennetta and Giuseppe Rimo

Economics Letters, 2025, vol. 249, issue C

Abstract: The election of Donald Trump as the 45th president of the United States and his sceptical positions on climate threaten the fight against climate change, potentially weakening investors’ green concerns. Through an event study approach, we aim to analyse the reaction of the U.S. stock market to the latest presidential election, exploring the investors’ reactions across sectors. We find a strong heterogeneous reaction across sectors. Moreover, we show that the worst performance in the short period is attributable to companies with better performance on environmental issues, which could mean an adjustment of investors’ assessment criteria in anticipation of President Trump's anti-climate policies, reduced transition risk for "brown" firms and lower benefits for firms excelling in environmental performance.

Keywords: Political elections; ESG; Environmental performance; Stock market; Event study (search for similar items in EconPapers)
JEL-codes: G10 G14 G18 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:249:y:2025:i:c:s0165176525000989

DOI: 10.1016/j.econlet.2025.112261

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