A Study of Social Network Effects on the Stock Market. Issue 4 (1st October 2016)

• Record Type: Journal Article
• Authors: Reed, Markum
• Is Part Of: Journal of behavioral finance. Volume 17:Issue 4(2016)
• Page Start: 342
• Page End: 351
• Publication Date: 2016-10-01
• Subjects: Social networks -- Predictive markets -- Twitter network -- Wisdom of crowds -- Economic indicator prediction -- Stock prices; Capital market -- Psychological aspects -- Periodicals; Finance -- Psychological aspects -- Periodicals; 332.019
• DOI: 10.1080/15427560.2016.1238371
• Languages: English
• ISSNs: 1542-7560

Abstract

ABSTRACT: Consumer confidence is an economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy as well as their personal financial situation. The authors measure consumer sentiment via analysis of social networks and show that such sentiment affects stock prices; specifically, the S&P 500 and the Dow Jones Industrial Average. Shiller, Fischer and Freidman [1984], Fisher and Statman [2003], and Bremmer [2008] also examine the influence of consumer sentiment, measured from Conference Board data, on the stock market. The authors add to this literature by creating a measure of consumer confidence by utilizing Twitter data and by examining the relationship between our measure of consumer sentiment and the S&P 500 and the Dow. They implemented lexicographic analysis of Twitter data over a three-month period and found that talk intensity of economic issues not only causes shifts in the daily stock market prices, but also has a significant negative effect.