Volume 10, 2019
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Department of Economics 11935 Abercorn Street Savannah, GA 31419 10 2019 DR. CLAY MOFFETT DR. MICHAEL TOMA 1 0 , 2 0 1 9 Volume 10 2019 Editors: Clay M. Moffett, Finance Michael Toma, Economics University of North Carolina Wilmington Georgia Southern University Associate Editors: Doug Berg, Sam Houston State University Rick McGrath, Georgia Southern University Robert Burrus, UNC Wilmington Bhavneet Walia, Western Illinois University Al DePrince, Middle Tennessee State University Shahdad Naghshpour, Alabama A&M University David Boldt, University of West Georgia James Payne, University of Texas – El Paso J. Edward Graham, UNC Wilmington Shane Sanders, Western Illinois University Kathleen Henebry, University of Nebraska, Omaha Robert Stretcher, Sam Houston State University David Lange, Auburn University Montgomery Richard Vogel, Farmingdale State College, SUNY Steve Jones, Samford University Aims and Scope of the Academy of Economics and Finance Journal: The Academy of Economics and Finance Journal (AEFJ) is the refereed publication of selected research presented at the annual meetings of the Academy of Economics and Finance. All economics and finance research presented at the meetings is automatically eligible for submission to and consideration by the journal. The journal and the AEF deal with the intersections between economics and finance, but special topics unique to each field are likewise suitable for presentation and later publication. The AEFJ is published annually. The submission of work to the journal will imply that it contains original work, unpublished elsewhere, that is not under review, nor a later candidate for review, at another journal. The submitted paper will become the property of the journal once accepted, and not until the paper has been rejected by the journal will it be available to the authors for submission to another journal. Volume 10: Volume 10 of the AEFJ is sponsored by the Academy of Economics and Finance and the Department of Economics and Finance at the University of North Carolina Wilmington. The papers in this volume were presented at the Fifty- Fifth Annual Meeting of the AEF in St. Petersburg, FL. from February 6-9th, 2019. The program was arranged by Dr. Olivier Maisondieu Laforge, University of Nebraska Omaha. Volume 10 Table of Contents 2019 How Presidential Tweets Affect Financial Markets 1 Sasha Cove and Marc Sardy, Rollins College Breakeven Point Analysis: 7 An Alternative Breakeven Point Analysis Paradigm David P Echevarria, University of North Carolina Wilmington Do Microfinance Institutions Help with Business Growth? Evidence from Rural Nepal 15 Shankar Ghimire, Western Illinois University David Clifford and Grace Costa, Maryville College Testing for Freak Jumps in Exchange Rates 25 Scott Gilbert, Southern Illinois University Carbondale Hio Loi, The University of Tennessee at Martin Interest Rate Pass-Through from the Effective Federal Funds Rate to Various Market 35 Interest Rates Natalie Hegwood, Mark Tuttle, and M. Douglas Berg, Sam Houston State University Capitalization of Public Perception in MLB Player Salaries 41 Gayla Nicole Herbert and Jason Beck, Georgia Southern University Casey Brasher, Pfeiffer University An Analysis of the High-performing Property Asset Manager in the Multi-family Real 47 Estate Industry, According to Executives Christine A. Jubelt, Rollins College The ETF Liquidity Illusion 57 Richard A. Lewin & Marc J. Sardy, Rollins College Bootstrapping a Zero-Coupon Yield Curve: 65 An Exercise for Finance Students William A. Reese, Jr. and Russell P. Robins, Tulane University Canadian Hockey Leagues Game-to-Game Performance 71 Nick Riccardi, Syracuse University Female Employment and Public Policy Impact on International Fertility 79 Yassaman Saadatmand, Georgia Southern University Lainey Sapp, Georgia Ports Authority Does Doing Well Lead to Doing Better? Evidence from ESG Impact Investing and the S&P 85 500 Marc J. Sardy, Rollins College R. Paul Herman & Onindo Khan, HIP Investor Inc. Long-run Equilibrium Shifts and Short-run Dynamics of National Stock Markets during 91 Financial Crisis John Tarwater, Cedarville University How Efficient Can R&D Activities Be?A Study Based on High-tech Industry in China 103 Shuangjin Wang, Tianjin University of Commerce, China Richard Cebula, and Maggie Foley, Jacksonville University Copyright 2019 by the Academy of Economics and Finance All Rights Reserved How Presidential Tweets Affect Financial Markets Sasha Cove and Marc Sardy, Rollins College Abstract This paper examines the effect of President Trump’s Tweets and their impact on financial markets as measured by the Market proxy of the S&P 500. Data has been collected on Trumps tweets since his presidency began until fall 2018, Market data is based on daily S&P results for the daily returns. Our findings are that Trumps tweets have an impact on financial markets even at the level of daily returns. Introduction The manner in which information is disseminated to the masses has evolved with the introduction of social media platforms. Individuals are now receiving their daily news in the form of Facebook updates, Instagram posts, and Twitter ‘tweets.' The average Twitter user can see around 1,000 tweets in the fourteen minutes that they spend on Twitter in a day, meaning that users often spend only seconds on a given tweet (Pancer, E., & Poole, M. 2016). Twitter, in particular, came to the foreground during the 2016 presidential election, as candidates used the platform to increase their media coverage and garner public support. This method proved extremely successful for the current president of the United States, Donald Trump, who achieved unprecedented media coverage through his Twitter activity. His current position gives his tweets the power to influence public sentiment, and thus the performance of the financial markets. Social media use is becoming integral to politics, not only as a method of keeping up with political news, but also as a mechanism through which individuals’ political views and involvement are being impacted. A survey conducted by the Pew Research Center found that 25% of social networking site (SNS) users said that the sites are ‘very important’ or ‘somewhat important’ to them in discussing or debating political issues with others, 25% of users say that they have become more active in a political issue after discussing or reading about it online, and that 16% of users say that they have changed their views about a political issue after discussing or reading about it online (Rainie, L., & Smith, A. 2014 ). Furthermore, Social media’s use as a media outlet is will continue to grow in importance in coming years, as social media is most used by the younger generations. As this generation ages, they are beginning to comprise a growing portion of the voting population, indicating that social media will maintain its relevance in politics. The use of social media in politics has become a method through which the younger generation can be engaged; there is a strong positive correlation between social media use and youth political engagement in users between the ages of 16 and 29 (Michael Xenos, Ariadne Vromen & Brian D. Loader 2014). The emergence of the new hybrid media system has changed the ‘currency' of the media system as a whole. It is no longer the ability to communicate to mass audiences, but rather the ability to attract attention from them in a world where the average individual is constantly inundated with massive amounts of information on a day to day basis. In our new ‘attention economy,’ media organizations and platform compete for views, as do the issues, actors, causes, and factions that comprise our political sphere (Zhang, Y., Wells, C., Wang, S., & Rohe, K. 2018). According to Zhang et al. in “Attention and amplification in the hybrid media system: the composition and activity of Donald Trump’s Twitter following during the 2016 presidential election," attention's power is derived from its four characteristics. It is necessary to change or mobilize the opinions of an audience, as it gives an actor access to the ‘socialized communication' that lends an audience to its depiction. It can be a mechanism for translating communication’s power into action; politically, it can be converted into civic engagement. It is a transferrable currency, as the holder of attention has the power to direct said attention to another. Finally, it is powerful because others perceive it as powerful; it holds a ‘popularity bias,’ as attention tends to beget attention. Zhang et al. also introduced the idea of social media amplification, which are the actions of social media users that increase measures of engagement or audience metrics, the likes, @replies, follower number, and retweets a Twitter account receives. Twitter’s software uses these measures to engagement to determine what is ‘trending,’ what to feature on the platform’s homepage and what will appear at the top of a user’s newsfeed. In this sense, the attention given to a tweet is exponential; with each retweet the tweet is disseminated to the followers of the account that retweeted it, causing more retweets, more likes, more attention. The amount of attention an individual receives on social media has become an indicator of social status, of ‘worthiness,’ and this ‘worthiness’ is often translated to news-worthiness (Zhang, Y., Wells, C., Wang, S., & Rohe, K. 2018). As a tweet begins to ‘trend,’ news platforms feel required to cover it, if not only to beat their competitors to the punch. As such, the tweets of socially relevant individuals have been increasingly covered in the news, providing the tweets with validity, and further increasing the attention the tweets receive. Social media activity levels can be predictive of stock performance. A study researched the correlation between intra-day responses of the stock market and the spread of news on Twitter. Unusually high spikes in Twitter activity regarding 96 firms 1 on the NASDAQ over 193 trading days were statistically compared with Yahoo! Finance data of the related firms over the forty minutes following the spike.