Weibo vs Wall Street Journal: How are Social & Mass Media Different in the Stock Market?

31 Pages Posted: 12 Aug 2019

See all articles by Hang Dong

Hang Dong

IE University

Jie Ren

Fordham University

Balaji Padmanabhan

University of South Florida - College of Business Administration

Jeffrey V. Nickerson

Stevens Institute of Technology - School of Business

Date Written: August 8, 2019

Abstract

While investors in financial markets have access to information from both mass media and social media, trading platforms that curate and provide this information have little to go by in terms of understanding their relative value. This research note compares social media with mass media in the stock market from the lenses of information diversity and value in predicting future stock returns. Using nearly a million stock-related news articles and 12.7 million stock-related social media messages from Sina’s Finance news platform and the popular Weibo platform in China for the year of 2014, we find that in the stock market the information coverage of social media is less diverse than that of mass media, a finding that gets exacerbated with increasing volume of media information. In the short-term (one to five days) we show that both types of content have predictive value but are relevant in different time horizons. Our empirical evidence suggests that social media and mass media serve stock market investors differently and have significant practical implications for the design of trading platforms and for future research.

Keywords: social media, mass media, information coverage diversity, predictive value, future stock return

Suggested Citation

Dong, Hang and Ren, Jie and Padmanabhan, Balaji and Nickerson, Jeffrey V., Weibo vs Wall Street Journal: How are Social & Mass Media Different in the Stock Market? (August 8, 2019). Available at SSRN: https://ssrn.com/abstract=3434161 or http://dx.doi.org/10.2139/ssrn.3434161

Hang Dong

IE University ( email )

Calle Cardenal Zuñiga, 12.
Segovia, 40003
Spain

Jie Ren (Contact Author)

Fordham University ( email )

Rose Hill Campus Bronx
New York, NY 10458
United States

Balaji Padmanabhan

University of South Florida - College of Business Administration ( email )

4202 E. Fowler Avenue, BSN 3403
Tampa, FL 33620-5500
United States

Jeffrey V. Nickerson

Stevens Institute of Technology - School of Business ( email )

Hoboken, NJ 07030
United States

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