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The relevance and influence of social media posts on investment decisions of young and social media-savvy individuals — An experimental approach based on Tweets

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  • Kuerzinger, Lars
  • Stangor, Philipp

Abstract

We conducted an experiment to examine the role of positive and negative tweets (generated by AI) on investment behavior of young and social media-savvy individuals, comparing them with provided historical and fundamental financials. Through mediator analysis, we discovered that positive tweets have a significantly positive mediating effect on investment amounts, while negative tweets have a negative impact. Importantly, we found that this effect is not primarily driven by the perception of the tweets; rather, positive tweets influence individuals’ perception of a company’s financials which is the most influencing factor in individuals’ investment decision. In this manner our study contributes to the existing literature by (1) proving evidence for a causal effect of social media investor sentiment on investment behavior on capital markets and especially (2) focussing how the influence channels are built.

Suggested Citation

  • Kuerzinger, Lars & Stangor, Philipp, 2024. "The relevance and influence of social media posts on investment decisions of young and social media-savvy individuals — An experimental approach based on Tweets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:beexfi:v:44:y:2024:i:c:s2214635024001205
    DOI: 10.1016/j.jbef.2024.101005
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    More about this item

    Keywords

    Investor sentiment; Social media; Experimental finance; Behavioral finance; Efficient market hypothesis; Mediator analysis;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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