Social Media and Financial News Manipulation

74 Pages Posted: 31 Aug 2018 Last revised: 15 Sep 2021

See all articles by Shimon Kogan

Shimon Kogan

IDC Herzliya - Arison School of Business; University of Pennsylvania - The Wharton School

Tobias J. Moskowitz

Yale University, Yale SOM; AQR Capital; National Bureau of Economic Research (NBER)

Marina Niessner

University of Pennsylvania - The Wharton School

Date Written: September 15, 2021

Abstract

We dissect an undercover SEC investigation into the manipulation of financial news on social media to study the indirect effects of market manipulation. While fraudulent news had a direct impact on retail trading and prices, revelation of the fraud caused market participants to discount all news, including legitimate news, from these platforms. The results highlight the indirect consequences of fraud and its spillover effects that reduce the social network’s impact on information dissemination, especially for small firms. The effect appears to dissipate over time, becoming insignificant a year later. The results highlight the importance of social capital for financial activity.

Suggested Citation

Kogan, Shimon and Moskowitz, Tobias J. and Moskowitz, Tobias J. and Niessner, Marina, Social Media and Financial News Manipulation (September 15, 2021). Available at SSRN: https://ssrn.com/abstract=3237763 or http://dx.doi.org/10.2139/ssrn.3237763

Shimon Kogan

IDC Herzliya - Arison School of Business ( email )

P.O. Box 167
Herzliya, 46150
Israel

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Tobias J. Moskowitz

AQR Capital ( email )

Greenwich, CT
United States

Yale University, Yale SOM ( email )

New Haven, CT 06520
United States

HOME PAGE: http://som.yale.edu/tobias-j-moskowitz

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Marina Niessner (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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