TURKISH STEEL PRODUCER COMPANIES’ REACTION TO TRUMP'S AUGUST 10, 2018 TWEET OF DOUBLING TARIFFS: AN EVENT STUDY ANALYSIS

Year 2019, Volume: 6 Issue: 4, 206 - 216, 30.12.2019

Suadiq Mehammed Hailu , Hatice Dogukanli

Abstract

Purpose- Stock markets are reacting to different events that happened inside or outside the company. The dissemination of information on social media is one of the events affecting the performance stock market. The main aim of this paper is to examine the reaction of steel producer companies listed in Borsa Istanbul to Trump's tweet of doubling tariffs on steel products importing from Turkey to the US on August 10, 2018.
Methodology- The event study analysis was applied to investigate the impact of Trump's Tweet. Daly adjusted closing prices for sample companies and BIST100 index covering 156 days between January 1, 2018 - August 17, 2018, was collected from Yahoo’s finance Website. The selected sample companies for this study are Çemtas Çelik Makina Sanayi ve Ticaret (CEMTS), Eregli Demir ve Çelik Fabrikalari (EREGL, Gentas Genel Metal Sanayi ve Ticaret (GENTS), Iskenderun Demir ve Çelik (ISDMR) andKardemir Karabük Demir Çelik Sanayi Ve Ticaret (KRDMD). The market model was used to determine the normal stock return in the estimation period. A t-test was used to examine the significance of abnormal returns of sample companies' stock. BIST100 index used as a proxy of the market.
Findings- The finding shows that from the sample companies investigated in this study; CEMTS, EREGL, GENTS and KRDMD stocks are not significantly affected by Trump’s tweet. ISDMR was the only stock among the samples vent that affected by the negatively and significantly with t-statistic (-2.18) at 5% significance level.
Conclusion- In general, the finding of the study indicated that Trump’s Tweet was not significantly affected the performance of Turkey’s steel producer companies listed in Borsa Istanbul.

Keywords

Abnormal return, market model, social media, stock market, tariff, twitter

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