Digital Leadership, Information Entropy, and Stock Price Volatility: Evidence from CEO Social Media Behavior.

Area of Science:

• Digital Economy
• Financial Markets
• Information Theory

Background:

• Social media is a key channel for corporate executive communication with investors.
• Executive communication influences market expectations and stock price dynamics.
• Understanding CEO social media impact on stock volatility is crucial.

Purpose of the Study:

• Examine how CEO social media behavior affects stock price volatility.
• Analyze executive communication under transactional and transformational leadership styles.
• Develop a novel metric to interpret the mechanism of information flow.

Main Methods:

• Utilized deep learning methods, including BERT, LDA, and Long Short-Term Memory (LSTM) models.
• Extracted emotional tone, thematic alignment, and diffusion intensity from executive communications.
• Introduced Semantic Resonance Dissipation Entropy (SRE) to measure informational friction.

Main Results:

• Incorporating high-dimensional semantic features significantly improved stock volatility prediction.
• Transactional leadership correlated with stable semantic patterns and low entropy.
• Transformational leadership correlated with higher entropy and greater semantic dispersion.
• Elon Musk's Twitter acquisition created a persistent information environment factor.

Conclusions:

• CEO social media behavior significantly impacts stock price volatility.
• Leadership styles (transactional vs. transformational) exhibit distinct entropic patterns.
• Limiting information dissipation is key for signal clarity in financial markets.