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Social media, news media and the stock market

Author

Listed:
  • Jiao, Peiran
  • Veiga, André
  • Walther, Ansgar

Abstract

We study the effect on stock volatility and turnover of coverage by traditional news media and social media. We find that coverage by traditional news media predicts decreases in subsequent volatility and turnover, but coverage by social media predicts increasesin volatility and turnover. We show that these patters are consistent with a model of “echo chambers”, where social networks repeat news, but some investors interpret repeated signals as genuinely new information.

Suggested Citation

  • Jiao, Peiran & Veiga, André & Walther, Ansgar, 2020. "Social media, news media and the stock market," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 63-90.
    • Handle: RePEc:eee:jeborg:v:176:y:2020:i:c:p:63-90
    DOI: 10.1016/j.jebo.2020.03.002
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    More about this item

    Keywords

    Social media; News media; Asset prices;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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