Private prison stocks and the 2020 presidential election.

TRUMP, Donald, 1946-; UNITED States Capitol (Washington, D.C.); PRESIDENTIAL elections; GARCH model; UNITED States presidential election, 2020; PRIVATE prison industry; INAUGURATION of United States presidents; ELECTION Day

Objective: Can we gain insight into the outcomes of presidential elections, and their determinants, other than through opinion polling or prediction markets? This matters because of recent misses in polling and the contestation of the 2020 election beyond Election Day. Methods: Using alternative generalized autoregressive conditional heteroskedasticity models, we conduct an event study of two U.S. private prison companies, whose valuations have depended on their being awarded federal contracts, during the 2020 campaign and afterward. Results: Comparison around Election Day of changes in prison company stock prices based on these models and in the predicted probability of President Trump being reelected based on a popular prediction market allows inference of the effects of the January 6 incident at the U.S. Capitol and the Biden inauguration on the subjective probability that Trump would retain power. Conclusion: The probability of Trump retaining power that was reflected in asset markets remained positive up to the Biden inauguration—a real‐time indication of the fragility of American democracy. [ABSTRACT FROM AUTHOR]

Copyright of Social Science Quarterly (Wiley-Blackwell) is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)