Political Attitudes and Equity Market Reactions to Vaccine Mandate Bans
Dr. Yihui Pan
David Eccles Faculty Fellow & Emerging Scholar
The David Eccles School of Business
In 2021, many firms began considering and implementing vaccine mandates as a means to return workers to in-person work. In response, twelve states enacted laws banning employer COVID-19 vaccine mandates. We study equity market reactions to these bans and find a 0.64 percentage point increase in cumulative abnormal returns to affected firms over a three-day window when the bans are signed into law, compared to unaffected firms. The positive market reaction concentrates in firms in more Republican-leaning counties, while firms located in more Democratic-leaning counties experience mildly negative market reactions, especially in tight labor markets or when on-site labor participation is required. Overall, our findings highlight the importance of workers’ non-monetary preferences on labor-related outcomes and suggest that regulations aligned with workers’ preferences could relieve firms from potential labor adjustment costs.