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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Vijay S. Sampath & Arthur J. O’Connor & Calvester Legister, 2022. "Moral leadership and investor attention: An empirical assessment of the potus’s tweets on firms’ market returns," Review of Quantitative Finance and Accounting, Springer, vol. 58(3), pages 881-910, April.
    • Handle: RePEc:kap:rqfnac:v:58:y:2022:i:3:d:10.1007_s11156-021-01012-0
    DOI: 10.1007/s11156-021-01012-0
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    More about this item

    Keywords

    Event study; Market efficiency; Presidential tweets; Cumulative abnormal return;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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