How CEO donations drive stock prices: Evidence from the Trump 2024 election

Dennis Koch and Dirk Schiereck

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: This study examines the impact of CEO political support on the market valuation of Russell 3000 firms following the 2024 U.S. presidential election. Using event study methodology and federal donations data, we find that both the relative share and absolute amount of CEO donations to the Republican Party positively relate to abnormal stock returns post-election, while Democratic support results in significant penalties. Specifically, firms with Republican-leaning CEO experience 3.5 percentage points higher cumulative abnormal returns than firms with Democratic-leaning CEO five days after the election. Our findings suggest that investors anticipate economic benefits and risks for firms based on their CEOs’ political alignment with the Trump administration. By focusing on CEO donations and continuous measures of political support, this study provides novel insights into the financial implications of corporate political behavior, highlighting the importance of personal loyalty in a polarized environment.

Date: 2025-05-31
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Published in Finance Research Letters (2025-05-31)

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