The Review of Asset Pricing Studies Vol. 10 No. 4 2020

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

J. Anthony Cookson¹; Joseph Engelberg²; William Mullins²

¹ Leeds School of Business, University of Colorado Boulder · ² Rady School of Management, 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 partisan Republicans remain relatively unfazed in their beliefs about equities 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 during the COVID-19 crisis, 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.

DOI

10.1093/rapstu/raaa018

Volume

10

Issue

4

Pages

863-893

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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