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Does connection with @realDonaldTrump affect stock prices?

Author

Listed:
  • Rui Fan

    (School of Management, Swansea University)

  • Oleksandr Talavera

    (School of Management, Swansea University)

  • Vu Tran

    (School of Management, Swansea University)

Abstract

This study investigates whether investors react to signals of an association between a firm and Donald Trump indicated by tweets containing both words 'Trump' (or '@realDonaldTrump') and a S&P500 firm name. Our results reveal that a large number of such tweets ignite speculations about a political connection between a firm and the US's President, thus affecting investors' trading behaviors. In particular, a rise in these tweets induces significant increases in trading volatility and trading volume. However, we do not find such great impacts on stock returns, suggesting that the speculations are more likely to spread among small non-institutional investors. Further investigations show that sentiments embedded in these tweets have limited influence. There is evidence of a changing market behavior towards such tweets centered by the President's inauguration.

Suggested Citation

  • Rui Fan & Oleksandr Talavera & Vu Tran, 2018. "Does connection with @realDonaldTrump affect stock prices?," Working Papers 2018-07, Swansea University, School of Management.
    • Handle: RePEc:swn:wpaper:2018-07
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    File URL: https://rahwebdav.swan.ac.uk/repec/pdf/WP2018-07.pdf
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    Cited by:

    1. Kinyua, Johnson D. & Mutigwe, Charles & Cushing, Daniel J. & Poggi, Michael, 2021. "An analysis of the impact of President Trump’s tweets on the DJIA and S&P 500 using machine learning and sentiment analysis," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).

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    More about this item

    Keywords

    Twitter; US Election; stock market; investor sentiment; text classification; computational linguistics.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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