Social Media and Stock Market Participation

61 Pages Posted: 31 Aug 2023 Last revised: 18 Apr 2024

See all articles by Karsten Müller

Karsten Müller

National University of Singapore (NUS) - Department of Finance

Yuanyuan Pan

National university of Singapore

Carlo Schwarz

Bocconi University - Department of Economics

Date Written: June 04, 2024

Abstract

Using plausibly exogenous variation in regional Twitter adoption in the United States, we show that a 10% increase in social media usage causes a 2.5% rise in stock ownership. Consistent with lowering the costs of acquiring information, Twitter has larger effects in counties with low pre-existing stock market knowledge, improves knowledge about asset returns, and leads to a decline in the number of financial advisors. Social media also boosts interest in volatile "meme stocks" favored by retail investors. Our findings highlight the unique influence of social media on household portfolio decisions, distinct from other modern information technologies.

Keywords: Social Media, Stock Market Participation, Household Finance, Participation Puzzle D14

Suggested Citation

Müller, Karsten and Pan, Yuanyuan and Schwarz, Carlo, Social Media and Stock Market Participation (June 04, 2024). Available at SSRN: https://ssrn.com/abstract=4557783 or http://dx.doi.org/10.2139/ssrn.4557783

Karsten Müller (Contact Author)

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

Yuanyuan Pan

National university of Singapore ( email )

Singapore
90872791 (Phone)

Carlo Schwarz

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

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