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Using Social Media to Identify the Effects of Congressional Viewpoints on Asset Prices

Author

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  • Francesco Bianchi
  • Roberto Gomez Cram
  • Howard Kung

Abstract

We use a high-frequency identification approach to document that individual politicians affect asset prices. We exploit the regular flow of viewpoints contained in Congress members’ tweets. Supportive (critical) tweets increase (decrease) the stock prices of the targeted firm and the corresponding industry in minutes around the tweet. The bulk of the stock price effects is concentrated in the tweets revealing news about future legislative action. The effects are amplified around committee meeting days, especially when the tweet originates from committee members and influential politicians. Overall, we show that Congress members’ social media accounts are an important source of political news.

Suggested Citation

  • Francesco Bianchi & Roberto Gomez Cram & Howard Kung, 2021. "Using Social Media to Identify the Effects of Congressional Viewpoints on Asset Prices," NBER Working Papers 28749, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28749
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    Cited by:

    1. Bianchi, Francesco & Gómez-Cram, Roberto & Kind, Thilo & Kung, Howard, 2023. "Threats to central bank independence: High-frequency identification with twitter," Journal of Monetary Economics, Elsevier, vol. 135(C), pages 37-54.
    2. Javier Gil-Bazo & Juan F. Imbet, 2022. "Tweeting for money: Social media and mutual fund flows," Economics Working Papers 1846, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Guy Aridor & Rafael Jiménez-Durán & Ro'ee Levy & Lena Song, 2024. "The Economics of Social Media," CESifo Working Paper Series 10934, CESifo.
    4. Alistair Macaulay & Wenting Song, 2022. "Narrative-Driven Fluctuations in Sentiment: Evidence Linking Traditional and Social Media," Economics Series Working Papers 973, University of Oxford, Department of Economics.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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