Presidential Attack Risk: The Impact of Trump's Tweets on Financial Markets

Abstract

The prevalence of social media has inspired multiple researchers to investigate the value of information on various platforms. However, most studies focus on integrating individual views (the wisdom of the crowd), and few studies investigate just one person's effect. To close this gap, this article investigates the impact of Trump's tweets on stock markets. Based on intraday stock market data, this study uses an event study to test the immediate reaction of the stock markets in both the Chinese and U.S. markets. Next, with ordinary least squares (OLS) regression, this study testes the effect of tweets' content features on the returns and volatility of the Chinese and U.S. indices. The results show that Trump's tweets impacted the financial market, especially the returns of the U.S. stock market during the COVID-19 pandemic. With additional analyses based on industry indices and time frequencies, the researchers found that Trump's sentiment on Twitter affected the Chinese financial industry during the trade war and impacted the Chinese pharmaceutical industry during the pandemic.