How do financial markets price political uncertainty? Evidence from the 2024 United States presidential election

Matthew Flynn and Augustine Tarkom

Finance Research Letters, 2025, vol. 75, issue C

Abstract: This study examines the relationship between perceived election outcomes and financial markets by analyzing the unique case of a United States presidential candidate with direct corporate interests. Focusing on Donald Trump's media company (DJT) and his 2024 presidential election odds from betting markets, we document robust evidence of market interdependence across multiple empirical specifications. Our findings reveal that while betting markets efficiently incorporate new political information, financial markets demonstrate systematic delays in price adjustment, suggesting the presence of information processing frictions. These results provide novel insights into the differential speed and efficiency of political information processing across market types.

Keywords: Financial markets; Betting markets; Elections; Market efficiency (search for similar items in EconPapers)
JEL-codes: D72 G14 G41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001448

DOI: 10.1016/j.frl.2025.106879

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