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Ideology-Driven Social Media Opinions and Capital Markets: Evidence from Polarizing Boycotts
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DOI：10.1016/j.jacceco.2026.101909.png)
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Abstract
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Investors increasingly turn to social media for information, even though many sites are saturated with ideological opinions. This paper examines whether ideology-driven social media opinions affect stock market responses to polarizing firm news, using boycotts as the empirical setting. On average, polarizing boycotts are associated with a 1% (2.3%) drop in equity value over the seven (60) trading days after gaining social media traction. Consistent with ideology-driven opinions affecting market responses, the immediate price reaction is more negative when users ideologically aligned with boycotters dominate social media, particularly when their opinions are visible and financially relevant. A mediation analysis suggests that this association operates indirectly through overall social media sentiment toward the boycotted firms. Additionally, trading volume and daily return volatility following boycotts are positively associated with user ideological diversity. Together, these results suggest that ideology-driven social media opinions could influence how investors respond to polarizing firm news.
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