Does Partisanship Shape Investor Beliefs? Evidence from the COVID-19 Pandemic

J. Anthony Cookson, Joseph Engelberg and William Mullins
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William Mullins: UC San Diego

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Abstract: We use party-identifying language – like “Liberal Media” and “MAGA”– to identify Republican users on the investor social platform StockTwits. Using a difference-in-difference design, we find that the beliefs of partisan Republicans about equities remain relatively unfazed during the COVID-19 pandemic, while other users become considerably more pessimistic. In cross-sectional tests, we find Republicans become relatively more optimistic about stocks that suffered the most from COVID-19, but more pessimistic about Chinese stocks. Finally, stocks with the greatest partisan disagreement on StockTwits have significantly more trading in the broader market, explaining 28% of the increase in stock turnover during the pandemic.

Date: 2020-06-06
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Citations: View citations in EconPapers (34)

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DOI: 10.31219/osf.io/rwhse

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