Abstract
Does president Trump's use of Twitter affect financial markets? The president frequently mentions companies in his tweets and, as such, tries to gain leverage over their behavior. We analyze the effect of president Trump's Twitter messages that specifically mention a company name on its stock market returns. We find that tweets from the president which reveal strong negative sentiment are followed by reduced market value of the company mentioned, whereas supportive tweets do not render a significant effect. Our methodology does not allow us to conclude about the exact mechanism behind these findings and can only be used to investigate short-term effects.
Highlights
This is a tweet from the Twitter account of the president of the United States of America, Donald J
We investigate if the presidential tweets affect stock market returns in the first two years of his presidency and whether the sentiment of the tweet makes a difference
We study the impact of president Trump’s Twitter messages on the stock market
Summary
This is a tweet from the Twitter account of the president of the United States of America, Donald J. The US president can have a significant influence on the American economy [1,2]. To exert this influence, one of the means is communicating with the public. One of the means is communicating with the public In this respect, president Trump is the second US president to use Twitter to disseminate his thoughts. President Barack Obama used Twitter, president Trump is the first president to extensively communicate with the public in a personal and informal manner using social media. President Trump has outspoken opinions that often lead to extensive coverage in the media
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