Are US businesses under Trump’s Twitter thumb?

Tuesday 7 April 2020

President of the United States Donald Trump’s tweets about companies can have a negative impact on their market value when the tweets reveal strong negative sentiment, according to a new study.

The study, carried out by Professor Bert Scholtens, of the School of Management at the University of St Andrews and the Faculty of Economics and Business at the University of Groningen, and Heleen Brans, of the Faculty of Economics and Business at the University of Groningen in the Netherlands, investigated 100 tweets published during the first two years of Donald Trump’s Presidency which explicitly mentioned a company name.

The US President has mentioned companies in his tweets to gain leverage over their behaviour. In the new open access study in the journal PLOS ONE, the researchers analysed the effect of President Trump’s Twitter messages that specifically mention a company name on its stock market returns.

The authors studied how investors in the US stock market responded to such tweets by investigating the abnormal stock market return of the company associated with these tweets, while accounting for risk and the market trend. They also investigated whether the sentiment of the tweets matters. To this extent, they rely on SentiStrength, a sentiment analysis (opinion mining) programme which extracts sentiment strength from informal text. Accounting for sentiment is a novel feature in this type of financial market analysis.

Although on the day or following day of such tweets (example below), the authors concluded there was no statistically significant effect on the stock market value of the mentioned company, there was a difference when the sentiment of the tweet is taken into consideration:

As such, the President does not appear to move the stock market with his tweets in a statistically significant way and the tweets are not economically meaningful. These results confirm those from some other studies which used a much smaller sample, although they contrast with a study based on a sample of 15 tweets between the Presidential elections and the swearing in of President Trump.

However, when the authors of the latest study account for sentiment of the tweet, they found that tweets from the President which reveal strong negative sentiment are followed by reduced market value of the company mentioned. The President’s supportive tweets do not render a significant effect. This finding of asymmetry aligns with other studies in finance.

Professor Scholtens said: “These results show that President Trump’s tweets about companies can have a negative impact on their market value when the tweets reveal strong negative sentiment. The firms themselves usually are not in a position to respond.”

The methodology used does not allow the authors to conclude about the exact mechanism behind the findings and can only be used to investigate short-term effects.


Professor Scholtens is available for interview, please contact the press office in the first instance.

The paper, ‘Under his thumb - the effect of president Donald Trump’s Twitter messages on the US stock market' by  Heleen Brans and Bert Scholtens (2020) is published in PLoS ONE 15(3): e0229931

DOI: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0229931

Issued by the University of St Andrews Communications Office.

Category Research

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