Social Media, News Media and the Stock Market

We investigate whether Chinese cryptocurrency investors show confirmatory bias when processing authority-related news. Authority-related news is defined as news that is related to government authority (including central bank) policies or talk. By using data from the largest cryptocurrency exchange in China, we find that investors' response to authority-related news is negative and significant in general. Moreover, we find that the abnormal trading volume and standard deviation of abnormal trading volume are significantly higher for authority-related news with higher readability, suggesting investors respond to the more readable authority-related news with more trading behaviour.

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“…Duong et al . () and Jiao and Walther () find that investors’ perceptions of information is distorted by confirmatory bias. Pouget et al .…”

Section: Literature Reviewmentioning

confidence: 99%

Cryptocurrency, confirmatory bias and news readability – evidence from the largest Chinese cryptocurrency exchange

Zhang

Zhou

Pan

et al. 2019

Accounting & Finance

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“…The information shared on social media generates sentiments and reactions in investors that influence their decisions to buy or sell financial assets, especially on the stock market [ 18 ]. News shared on social media, whether true or not, cause changes in the trends of international stock market indices [ 19 ]. Some studies confirm the relationship between sentiments generated by social media in investors and market trends, and the current study continues this path in exploring pandemic periods with a lexicon-based approach to detect polarity in financial news on Twitter.…”

Section: Introductionmentioning

confidence: 99%

Does Twitter Affect Stock Market Decisions? Financial Sentiment Analysis During Pandemics: A Comparative Study of the H1N1 and the COVID-19 Periods

et al. 2021

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Investors are constantly aware of the behaviour of stock markets. This affects their emotions and motivates them to buy or sell shares. Financial sentiment analysis allows us to understand the effect of social media reactions and emotions on the stock market and vice versa. In this research, we analyse Twitter data and important worldwide financial indices to answer the following question: How does the polarity generated by Twitter posts influence the behaviour of financial indices during pandemics? This study is based on the financial sentiment analysis of influential Twitter accounts and its relationship with the behaviour of important financial indices. To carry out this analysis, we used fundamental and technical financial analysis combined with a lexicon-based approach on financial Twitter accounts. We calculated the correlations between the polarities of financial market indicators and posts on Twitter by applying a date shift on tweets. In addition, correlations were identified days before and after the existing posts on financial Twitter accounts. Our findings show that the markets reacted 0 to 10 days after the information was shared and disseminated on Twitter during the COVID-19 pandemic and 0 to 15 days after the information was shared and disseminated on Twitter during the H1N1 pandemic. We identified an inverse relationship: Twitter accounts presented reactions to financial market behaviour within a period of 0 to 11 days during the H1N1 pandemic and 0 to 6 days during the COVID-19 pandemic. We also found that our method is better at detecting highly shifted correlations by using SenticNet compared with other lexicons. With SenticNet, it is possible to detect correlations even on the same day as the Twitter posts. The most influential Twitter accounts during the period of the pandemic were The New York Times, Bloomberg, CNN News and Investing.com, presenting a very high correlation between sentiments on Twitter and stock market behaviour. The combination of a lexicon-based approach is enhanced by a shifted correlation analysis, as latent or hidden correlations can be found in data.

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“…Domestic and foreign shocks were considered as the main factor affecting the Indonesian stock market (Purnomo and Rider, 2012). Furthermore, a previous research has also studied the impact of news on the stock markets which reflected on the price dynamics (Chan (2003); Vega (2006); Tetlock (2007); Joulin et al 2008; Birz and Lott (2011); Ormos and Vazsonyi (2011); Jiao, Veiga and Walther (2016)). Moreover, researchers also argued that the stock markets are always affected by major events (Haque and Sarwar (2013), Waheed, Wei, Sarwar and Lv (2018)).…”

Section: Introductionmentioning

confidence: 99%

Estimating the Effect of the Covid-19 Outbreak Events on the Indonesia Sectoral Stock Return

Dilla

Sari

Achsani

2020

jabm

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Social Media, News Media and the Stock Market

Cited by 36 publications

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Cryptocurrency, confirmatory bias and news readability – evidence from the largest Chinese cryptocurrency exchange

Cryptocurrency, confirmatory bias and news readability – evidence from the largest Chinese cryptocurrency exchange

Does Twitter Affect Stock Market Decisions? Financial Sentiment Analysis During Pandemics: A Comparative Study of the H1N1 and the COVID-19 Periods

Estimating the Effect of the Covid-19 Outbreak Events on the Indonesia Sectoral Stock Return

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