Law on the Market
datasetA comprehensive 15-year study examining how Supreme Court decisions impact stock market returns, finding significant abnormal returns in 37% of cases
period: 2017-present
tech:
Legal AnalyticsFinancial Analysis
A groundbreaking empirical study investigating the financial market impact of Supreme Court decisions. This research provides the first comprehensive, longitudinal analysis of how judicial rulings affect publicly traded companies’ stock prices.
Key Findings
- Analyzed 211 Supreme Court cases over 15 years impacting publicly traded firms
- 79 cases (37%) exhibited significant abnormal returns
- Average abnormal return of 4.4% over a two-session window
- Abnormal returns materialize over hours and days, not minutes
- Supreme Court decisions responsible for over $140 billion in absolute wealth changes
Methodology
The study employs sophisticated event study methodology:
- Intraday and interday stock market data analysis
- Statistical significance testing with average |t|-statistic of 2.9
- Examination of both oral arguments and final decisions
- Control for market-wide movements and firm-specific factors
Research Impact
This work provides strong evidence for a “law on the market” effect, demonstrating that:
- Legal decisions have measurable economic impacts
- Markets do not immediately incorporate legal information
- Supreme Court rulings create significant trading opportunities
Authors
Collaborative research with:
- Daniel Martin Katz (Illinois Tech - Chicago Kent College of Law)
- Tyler Soellinger (Michigan State University - College of Law)
- James Ming Chen (Michigan State University - College of Law)