Does the Stock Market Anticipate Events and Decisions of the United States Supreme Court in Corporate Cases?

Publication Date



This paper investigates stock market reactions to judicial events in the United States Supreme Court (SCOTUS) relating to cases where at least one party involved is a public firm. Using a comprehensive dataset of more than 500 SCOTUS cases from 1948 to 2018, we find that the stock market is unable to anticipate SCOTUS’s actions and reacts significantly to both the grant of certiorari and to the announcement of the final decision. In particular, there is a significant negative stock market reaction to the grant of certiorari for the petitioner and respondent, portending general higher uncertainty ahead, and a positive (negative) stock market reaction to the final decisions for winning (losing) firms. We also find that specific case characteristics, such as parties involved and the type of legal issue explain some of the cross-sectional variations in the stock returns across cases. Our tests also indicate that there is no information leakage prior to the events, and no stock price drift after the events.


Global Finance Journal




Accounting and Financial Management


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