To what extent do network effects moderate the relationship between social media propagated news and investors’ perceptions? |
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| Institution: | 1. School of Accounting, Finance and Economics, University of Waikato, New Zealand;2. School of Accounting, Finance and Economics, University of Waikato, And Te Ngira - Institute for Population Research, University of Waikato, New Zealand;1. Paris School of Economics and CNRS, Mail: 48 Boulevard Jourdan, Paris 75014, France;2. Economix, Université Paris Nanterre, Mail: Bâtiment G - Maurice Allais, 200 Avenue de la République, Nanterre 92001-CEDEX, France;1. Department of Economics, Statistics and Finance ‘Giovanni Anania’, University of Calabria, Rende, Italy;2. Department of Economics and Statistics, University of Naples Federico II, Napoli, Italy;1. Department of Economics and Management, Thomas Sankara University, 12 PO Box 417 Ouagadougou 12, Burkina Faso;2. Department of Economic Policies and Internal Taxation, West African Economic and Monetary Union Commission, 01 PO Box 543 Ouagadougou 01, Burkina Faso;2. Department of Economics, Morgan State University, Baltimore, 10587, MD, USA;3. Lewis Honors College, University of Kentucky, 1120 University Dr., Lexington, 40526, Kentucky, USA;1. University of Labour and Social Affairs - Ho Chi Minh City campus, Ho Chi Minh City, Vietnam;2. School of Economics, University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam |
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| Abstract: | As a prominent social media tool, Twitter enables prompt dissemination of financial news and information, which can have a substantial impact on investors’ perceptions and decision-making processes. The propagation of financial news and information through Twitter can either positively or negatively affect investors’ perceptions. As per network theory, the impact of information on one's perception and behavior is known as the network effect. Since Twitter is also a network, we tried to contribute more to this theory in this study by considering other factors that can have an impact on the perceptions of investors. We argue that the impact of financial information and news on investors’ perceptions is moderated by other factors such as connectivity, social ties, and network size of the network. To establish the links between them, we considered three key factors in investors’ networks: (1) network connectivity (network structure); (2) social ties circle (friends, family, colleagues); and (3) size of the network (number of contacts). The results of this study indicate that highly connected investors receive more information and hence, the impact of news is derived from the connectivity of investors within the network. The findings of the study also show that the social ties circle plays a crucial role in determining the impact of the news. The findings further indicate that the impact of news on investors’ perceptions also depends on the theme of the news. |
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