Working Paper: CEPR ID: DP8713
Authors: Sharmin Sazedj; Jos Tavares
Abstract: Barack Obama?s victory in the 2009 presidential elections in the United States is widely credited to his personal charisma and his extraordinary rhetorical powers, as revealed throughout the campaign. President Obama was inaugurated in the midst of the worst economic crisis in the country, when individuals and organizations yearned for leadership and signs of change. We code an array of rhetorical features in Obama´s main speeches and press conferences and assess their impact on stock returns of the Dow Jones, S&P 500, and NASDAQ indices, at 3 and 7 day time horizons. We find that words matter. Paragraphs matter, too. We also uncover how some of Obama´s rhetorical abilities that are politically effective seem to be perceived negatively by economic agents, and have a significant negative impact on stock returns.
Keywords: Barack Obama; Financial Markets; Political Economy; Speech Content
JEL Codes: E44; G12; G14; H12; O51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| words like 'dream' (Y60) | stock market returns (G17) |
| terms like 'crisis' (G01) | stock market returns (G17) |
| terms like 'change' (O33) | stock market returns (G17) |
| anecdotes (Y60) | excess stock returns (G12) |
| overall tone of speeches (D72) | stock market returns (G17) |
| positive content in speeches (D78) | stock market returns (G17) |
| negative content in speeches (D72) | stock market returns (G17) |
| speech content (Y20) | excess stock returns (G12) |