A Comparative Analysis Between the Influence of Social Media and Mass Media on the Stock Market

Abstract

Now more than ever, the media has an active role in an investor’s life. From traditional news coverage to social media networking sites, news on the stock market spread within seconds. With Reddit and Twitter’s active role in company news, stock price movements can be exponential in short periods of time. This study analyzes the influence between social media and mass media on the stock market, by comparing its volatility returns with that of the markets. News articles and social media posts were collected through a series of coding bots that only chose sources with high viewing rates. Also, sources from the past few years were chosen due to their impact on the study. With these sources, I analyzed the volatility of the stock throughout a period of five trading days. Then compared the volatility of each stock to that of the Standard and Poor’s 500 in the same period. Moreover, further research investigated investors' sentiment towards the media through a questionnaire. The study found how both mass media and social media affect the markets constantly; however, social media has a greater impact than mass media when comparing the volatilities and percent changes.