Impact of Social Media and News Media on Financial Markets

Social Media has been a popular platform for individuals to share their opinions of financial markets. Meanwhile, journalists and analysts contribute to news media to express their analysis on financial securities. This research compares the effect of opinions expressed via social media and news media platforms on the subsequent market movement. We use text mining methods to capture the sentiments revealed on the most popular stock discussion form (HotCopper) and a popular news media platform Google Finance. We find that social media does not seem to replicate the information produced on news media. Investor sentiments from social media predict future stock returns at the individual firm level. We find no evidence that analysts' opinions on news media predict subsequent stock returns