Presidential tweets and stock market: the brexit case

Abstract

Can presidential tweets influence the stock market? The paper answers this question by analyzing Brexit-related tweets posted by Boris Johnson during his premiership. The uninformative nature of Johnson’s digital statements suggests that our hypothesis, if confirmed, would contradict the efficient market hypothesis (EMH). Through an event study, we found a positive and statistically significant effect of tweets on the FTSE 100’s returns. Findings were additionally corroborated by a regression analysis and a robustness check. The positive effect can be attributed to the investors valuing positively the reduced uncertainty on Brexit, but the overreaction to uninformative information remains incompatible with the EMH.