Moral leadership and investor attention: An empirical assessment of the potus’s tweets on firms’ market returns

Vijay S. Sampath (), Arthur J. O’Connor () and Calvester Legister ()
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Vijay S. Sampath: Silberman College of Business, Fairleigh Dickinson University
Arthur J. O’Connor: City University of New York
Calvester Legister: City University of New York

Review of Quantitative Finance and Accounting, 2022, vol. 58, issue 3, No 1, 910 pages

Abstract: Abstract Drawing upon investor attention and moral leadership theories, we examine the impact of President Trump’s tweets on firms’ market returns. In the first stage, we used event study methodology to measure market returns of public firms that were the subjects of the president’s tweets for the 30-month period starting with his election in November 2016. We found that total market returns increased by $50.03 billion at event window [0,0], $85.85 billion at window [0,1], and $145.54 billion at window [0,5]. In the second stage, using linguistic textual analysis, we ran multiple regression models to further examine the degree to which tweet sentiments explain variations in market returns. Sentiments associated with authenticity and self-praise were positively associated whereas emotional tone, insight, risk, and credibility deficit were negatively associated with market returns. The results suggest that moral leadership style influences the effect of presidential tweets on stock prices.

Keywords: Event study; Market efficiency; Presidential tweets; Cumulative abnormal return (search for similar items in EconPapers)
JEL-codes: G14 G41 M41 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11156-021-01012-0

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