Social Media Influencers and Stock Markets
Abstract
Social media influencers in the stock market are commonly assumed to have a significant impact on investor decision-making. We have examined how YouTube influencers at different power levels exert varying degrees of impact on trading volume and stock returns. We present four main findings (1) Theory and common belief are nearly correct in that high-influencer groups exert stronger effects on stock returns and trading volume than lower-influencer groups; (2) Furthermore, the uploading behavior of high-influence groups is associated with significantly positive BHAR over the 10- to 60-day horizon; (3) However, on average, compared with the most-high and less-high influencer group, the less-high influencer group showed the more effect on short-term stock returns and trading volume; (4) The weaker effect of most-high influencer group tends to be associated with their coverage of large firms and their choice of a more cautious tone in their videos. We have also found evidence of spillover effects from influencers, implying that video uploads by high-influencer groups lead to more uploads from others. Furthermore, influencers' effects are more pronounced under short-selling constraints.