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

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Listed:
  • Cookson, J. Anthony
  • Engelberg, Joseph E.
  • Mullins, William

    (UC San Diego)

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.

Suggested Citation

  • Cookson, J. Anthony & Engelberg, Joseph E. & Mullins, William, 2020. "Does Partisanship Shape Investor Beliefs? Evidence from the COVID-19 Pandemic," SocArXiv rwhse, Center for Open Science.
    • Handle: RePEc:osf:socarx:rwhse
    DOI: 10.31219/osf.io/rwhse
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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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