e-ISSN: 2582-5208

International ResearchJournal of Modernization in Engineering Technology and Science

( Peer-Reviewed, Open Access, Fully Refereed International Journal )
Volume:05/Issue:05/May-2023 Impact Factor- 7.868 www.irjmets.com

THE IMPACT OF SOCIAL MEDIA ON INVESTMENT DECISIONS: AN

EMPIRICAL ANALYSIS OF USER BEHAVIOR ON INVESTMENT PLATFORMS
Vishnu Maniy.R.V*1 , Rishi Priyan S*2 , Tharun Selvan S*3 ,
Padwalkar Anisha Sadanand *4 , Dr. Vinoth S *5 , Dr. Gopalakrishnan *6

*1,2,3,4MBA Students, Faculty Of Management(CMS Business School

) Jain Deemed To Be
University, Bengaluru.
*5 Professor, Faculty Of Management, CMS Business School, Jain Deemed To Be
University, Bengaluru.
*6 Associate Professor,Faculty Of Management, CMS Business School
, Jain Deemed
To BeUniversity, Bengaluru.
DOI :https://www.doi.org/10.56726/IRJMETS38929
ABSTRACT
This study examines the investment behavior of social media users and explores the relationship etween
b
social media usage and investment decisions. The study finds that most respondents are male, between the ages
of 18 and 40, have graduate education, and are students or in other occupations. Instagram and YouTube are
the preferred social media platforms, used mainly to connect with friends and family. The preferred investment
options are stocks and mutual funds. Gender is significantly associated with investment preferences. Social
media platforms are increasingly being used as sources of investment information, with Instagram being the
most influential and useful. Finally, there is a strong correlation between investment source options and social
media platform usage.
Keywords: Social Media, Investments, User behaviour, Usage, Impact, Influence.
I. INTRODUCTION
Social media platforms have become an integral part of our daily lives, affecting various aspects of our behavior,
including decision-making. The rise of social media has also impacted the financial industry, particularly
investment decisions. Theease of access to information and the ability to connect with a wider network has
enabled investors to gather information, learn from their peers, and make informed investment decisions. The
impact of social media on investment decisions has been a topic of interest among researchers, as it offers
insights into how social media platforms influence user behavior on investment platforms. This paper aims to
explore the impact of social media on investment decisions and analyze user behavior on investment forms.
plat
The use of social media platforms for investment purposes is not a new phenomenon. Online investment
communities have existed for several years, providing investors with a platform to share information, insights,
and experiences. However, with the iser of social media, these communities have expanded and evolved, with
social media platforms providing investors with new ways to connect and interact with other investors,
financial advisors, and investment experts. Social media platforms such as Twitter , LinkedIn, and Facebook,
have become popular sources of information for investors, offering a wealth of information on companies,
industries, and financial markets.
The impact of social media on investment decisions is a topic of interest as it provides
nsights
i into how social
media platforms influence user behavior on investment platforms. With the increasing use of social media in
the financial industry, it is essential to understand how these platforms impact investment decisions and the
potential risk s and opportunities they present. This paper aims to explore the impact of social media on
investment decisions and analyze user behavior on investment platforms to provide insights into how social
media can be used effectively in investment decision -making.
Influence of social media on investment decisions: Social media platforms offer investors access to a vast
amount of information that can be used to make investment decisions. For instance, investors can use social
media platforms to follow financial news, track stock market trends, and even monitor sentiment around
specific companies or products. In a study conducted by(Al-Balushi, H., Gupta, V., Madbouly, A. and Reyad,
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( Peer-Reviewed, Open Access, Fully Refereed International Journal )
Volume:05/Issue:05/May-2023 Impact Factor- 7.868 www.irjmets.com
2021) it was found that social media sentiment has a significant impact on stock prices. This suggests that
investors can use social media sentiment analysis to make informed investment decisions.
User behavior on investment platforms: Social media platformshave transformed the way investors interact
with each other, financial advisors, and investment experts. Online investment communities have become a
popular source of information and advice for investors. The social aspect of these platforms allows invest
ors to
share their experiences, knowledge, and insights, which can be valuable in making investment decisions.
(Guha,
Mandal, & Kujur, 2021)noted that social media use in the financial industry has increased in recent years, with
more investors relying on social media platforms to stay informed and make investment decisions.
Impact of social media influencers: Social media influencers have become an important source of investment
advice for many investors. These influencers have large followings on social media platf
orms, and their
opinions and recommendations can influence investor behavior. A study conducted by
(Miniesy, Elshahawy, &
Fakhreldin, 2022)found that Twitter sentiment can be used to predict stock market trends, suggesting that
social media influencers can have a significant impact
on investment decisions.
Risks and opportunities of social media: While social media platforms offer investors numerous opportunities
to make informed investment decisions, they also present certain risks. For instance, investors may be exposed
to false information or misleading advice on social media platforms, which could result in poor investment
decisions. Moreover, social media platforms can be subject to manipulation by individuals or groups with
malicious intent, leading to market manipulation and other fraudulent activities. While these platforms offer
numerous opportunities for investors to make informed investment decisions, they also present certain risks
that need to be carefully managed.
II. THEORETICAL UNDERPINNING
The most suitable theoretical framework for this study would be the Social Cognitive Theory (SCT). This is
because the SCT emphasizes how individuals learn and make decisions based on their observations of others'
behaviors, which is particularly relevant to the study of social media'smpact i on investment decisions. SCT
suggests that individuals learn by observing others and modeling their behavior. In the context of social media
and investment decisions, this theory can help explain how investors learn from others on social media
platforms and how it affects their investment decisions. For example, an investor may observe other investors'
investment decisions and use that information to guide their own investment decisions. Furthermore, SCT
emphasizes the importance of self -efficacy in decision-making. Self-efficacy refers to an individual's belief in
their ability to perform a specific task. In the context of investment decisions, self
-efficacy can play a role in how
investors use social media to gather information and make decisions. rFo example, an investor with high self-
efficacy may be more likely to use social media to gather information and make investment decisions based on
that information. Overall, the Social Cognitive Theory provides a useful framework for understanding how
social media influences investment decisions and user behavior on investment platforms.
"Social media and investor sentiment: Evidence from Facebook and Twitter" by (Maity & Sandhu, 2021)found
that social media sentiment has a significant impact on stock returns, and that social media can be used as a
predictor of future stock returns. "Social media and tock
s price reaction to earnings announcements" by
(Agarwal, Aziz, & Zhuang, 2022)found that social media can have a significant impact on stock price reactions
to earnings announcements, especially for companies with high levels of social media attenti
on.
"The impact of social media on investment decisions" by(Chaitanya & Nordin, 2021)found that social media
has a significant impact on investment decisions, wi
th investors relying on social media for investment advice
and information. "The influence of social media on individual investor behavior" by(Ali Al Atoom, Khalaf Alafi,
& Mohammad Al-Fedawi, 2021) found that social media has a significant impact on individual investor
behavior, with investors using social media to gather information andmake investment decisions.
"The impact of social media on stock market returns: Evidence from the United States" by (richard oliver (
dalam Zeithml., 2021) found that social media can have a significant impact on stock market returns, with social
media sentiment influencing stock returns.
These studies provide insights into the impact of social media on investment decisions and highlight the
importance of social media in shaping investor behavior and stock market performance. "Investor Sentiment,

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( Peer-Reviewed, Open Access, Fully Refereed International Journal )
Volume:05/Issue:05/May-2023 Impact Factor- 7.868 www.irjmets.com
Social Media and Stock Returns" by(Al-Balushi, H., Gupta, V., Madbouly, A. and Reyad, 2021)found that social
media sentiment is positively correlated with stock returns, indicating that investors may be using social media
to gain information and make investment decisions.
"Social Media and Individual Investors: Evidence fromFacebook" by Konstantinos (Miniesy et al., 2022)found
that individual investor s who actively engage on Facebook tend to be younger, have lower incomes, and trade
more frequently than investors who do not use social media, indicating that social media may have a significant
impact on the behavior of individual investors.
"The Impact of Social Media on Investors: Evidence from Facebook" by (Agarwal et al., 2022)found that social
media sentiment has a significant impact on investor attention and stock returns, suggesting that social media
can be used as a tool to predict market movements. "Social Media Sentim ent and Market Anomalies" by
(Chaitanya & Nordin, 2021) found that social media sentiment can predict market anomalies, such as stock
mispricings and earnings surprises, indicating that social media can provide valuable information to investors.
Overall, these studies suggest that social media can have a significant impact on investor behavior and stock
market performance. Social media sentiment and engagement can redict
p stock returns and market anomalies,
and social media can be used as a tool to predict market movements and gain information for investment
decisions.
"Investor behavior and trading activity on a social trading platform" by (Ali Al Atoom et al., 2021)found that
investors on social trading platforms tend to follow popular investment strategies and copy trades from other
successful investors, indicating a herd mentalityand a lack of independent thinking among users. "Exploring
user behavior on an online investment community: A case study of Seeking Alpha" by (Miniesy et al., 2022)
found that users on Seeking Alpha, a popular investment community, tend to exhibit a confirmation bias by
seeking out information that supports their existing beliefs anddisregarding information that contradicts them.
"User-generated content and financial markets: Evidence from an internet community for investors" by
(Agarwal et al., 2022)found that users on an investment community tend to be overconfident and trade more
frequently than other investors, leading to lower investment returns."Do social media interactions matter? An
empirical analysis of investor behavior on Twitter" by (Chaitanya & Nordin, 2021) found that social media
interactions can have a significant impact on investor behavior, with users who receive more likes and retweets
exhibiting more extreme investment behavior.
Overall, these studies suggest that user behavior on investment plat forms can be influenced by social and
psychological factors, such as herd mentality, confirmation bias, overconfidence, and social validation. Investors
on social trading platforms and investment communities tend to follow popular strategies and seek out
information that supports their existing beliefs, which can lead to suboptimal investment decisions and lower
investment returns. Social media interactions can also play a role in shaping investor behavior, with users who
receive more social validation exhibiting more extreme investment behavior. At the outset, present study
makes an attempt to address the below questions.
Research Questions
1. What is the impact of social media on investment decisions?
2. How does user behavior on investment platforms change due to social media?
3. What are the benefits and risks of using social media for investment decision
-making?
Research Objectives
x To examine the extent to which social media influences investment decisions.
x To analyze user behavior on investment platforms and id entify changes resulting from social media.
x To evaluate the potential benefits and risks of using social media for investment decision
-making.
III. RESEARCH METHODOLOGY
This study aims to investigate the impact of social media on investment decisions and user ehavior
b on
investment platforms. The study will focus on the use of social media for investment decision
-making and its
influence on investor behavior, including the benefits and risks associated with using social media for
investment decision-making. The study will use a qualitative approach to gather data from relevant sources,
including academic literature, industry reports, and online investment communitiesand quantitative approach
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( Peer-Reviewed, Open Access, Fully Refereed International Journal )
Volume:05/Issue:05/May-2023 Impact Factor- 7.868 www.irjmets.com
to gather data from structured questionnaire from 110 respondents. Descriptive statistics such as means,and
frequency distributions have been used to analyze the quantitative data collected from the investment and
social media platforms. Regression analysis have been used to identify the factors that influence users'
investment decisions based on the quantitative data collected from the investment platforms and social media
platforms.
There are some limitations to this study that should be considered. Firstly, the study will rely on secondary data
sources, which may be subjec t to bias and errors. Secondly, the study will not include a large -scale empirical
analysis of social media data and its impact on investment decisions due to data access limitations. Thirdly, the
study will be limited to English-language sources and may ot n include insights from non-English speaking
countries. Finally, the study will not explore the impact of specific social media platforms or social media
influencers on investment decisions, which could be a potential avenue for future research.
IV. ANALYSISAND RESULTS
4.1. Demographic Information on Respondents
Demographic
Levels Counts % of Total Cumulative %
Variables
18 - 40 107 ͻ͹Ǥ͵ԜΨ ͻ͹Ǥ͵ԜΨ
Age 41 - 60 1 ͲǤͻԜΨ ͻͺǤʹԜΨ
Under 18 2 ͳǤͺԜΨ ͳͲͲǤͲԜΨ
Female 52 Ͷ͹Ǥ͵ԜΨ Ͷ͹Ǥ͵ԜΨ
Gender
Male 58 ͷʹǤ͹ԜΨ ͳͲͲǤͲԜΨ
Graduate 55 ͷͲǤͲԜΨ ͷͲǤͲԜΨ
Post-Graduate 43 ͵ͻǤͳԜΨ ͺͻǤͳԜΨ
Education
Professional Degree 8 ͹Ǥ͵ԜΨ ͻ͸ǤͶԜΨ
School 4 ͵Ǥ͸ԜΨ ͳͲͲǤͲԜΨ
Business 5 ͶǤͷԜΨ ͶǤͷԜΨ
House-Wife 2 ͳǤͺԜΨ ͸ǤͶԜΨ
Occupation Retired 1 ͲǤͻԜΨ ͹Ǥ͵ԜΨ
Salaried Employee 34 ͵ͲǤͻԜΨ ͵ͺǤʹԜΨ
Student 68 ͸ͳǤͺԜΨ ͳͲͲǤͲԜΨ
Out of 110 respondents, the majority of them are male, i.e., 52.7%, and the remaining 47.3% are female.
7.3%9
of the respondents belong to the age group of 18 to 40. 50% of them are graduates, followed by 39% of them
who belong to the post-graduate education category. Majority (68% of the respondents) are students, followed
by salaried employees (i.e., 30%).
The demographic profile of the respondents infers that the majority of them
are male, between the age groups of 18 and 40, and belong to a graduate educational background and are
students from the occupation status.
4.2. Social Media Platform Usage
Social Media Platforms Counts % of Total Rank
Instagram, YouTube 20 ͳͺǤʹԜΨ 1
Instagram, LinkedIn, YouTube 16 ͳͶǤͷԜΨ 2
Instagram 14 ͳʹǤ͹ԜΨ 3
Facebook, Twitter, Instagram, LinkedIn, YouTube 9 ͺǤʹԜΨ 4
Facebook, Instagram, LinkedIn, YouTube 8 ͹Ǥ͵ԜΨ 5

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( Peer-Reviewed, Open Access, Fully Refereed International Journal )
Volume:05/Issue:05/May-2023 Impact Factor- 7.868 www.irjmets.com
Twitter, I nstagram, LinkedIn, YouTube 7 ͸ǤͶԜΨ 6
YouTube 6 ͷǤͷԜΨ 7
Facebook, Instagram, YouTube 4 ͵Ǥ͸ԜΨ 8
Twitter, Instagram, LinkedIn 3 ʹǤ͹ԜΨ 9
Facebook 2 ͳǤͺԜΨ 10
Facebook, Twitter, Instagram, LinkedIn, Reddit, YouTube 2 ͳǤͺԜΨ 11
Twitter, YouTube 2 ͳǤͺԜΨ 12
Facebook, Instagram, LinkedIn, YouTube, Snapchat 1 ͲǤͻԜΨ 13
Facebook, Twitter, Instagram, LinkedIn, Reddit 1 ͲǤͻԜΨ 14
Facebook, Twitter, Instagram, LinkedIn, Reddit, YouTube, 1 ͲǤͻԜΨ 15
Facebook, Twitter, Instagram, YouTube 1 ͲǤͻԜΨ 16
Facebook, Twitter, LinkedIn, YouTube 1 ͲǤͻԜΨ 17
Instagram, 1 ͲǤͻԜΨ 18
Instagram, LinkedIn 1 ͲǤͻԜΨ 19
Instagram, LinkedIn, TikTok, Reddit, YouTube 1 ͲǤͻԜΨ 20
Instagram, LinkedIn, YouTube, Snapchat 1 ͲǤͻԜΨ 21
Instagram, LinkedIn, YouTube, WhatsApp 1 ͲǤͻԜΨ 22
Instagram, LinkedIn, YouTube, WhatsApp 1 ͲǤͻԜΨ 23
LinkedIn, YouTube, WhatsApp 1 ͲǤͻԜΨ 24
Twitter 1 ͲǤͻԜΨ 25
Twitter, Instagram, LinkedIn, Reddit, YouTube 1 ͲǤͻԜΨ 26
Twitter, Instagram, TikTok, YouTube 1 ͲǤͻԜΨ 27
Twitter, Instagram, YouTube 1 ͲǤͻԜΨ 28
Twitter, Instagram, YouTube, Snapchat 1 ͲǤͻԜΨ 29
Total 110 100%
18.2% of the respondents preferred to use Instagram and YouTube social media platforms, followed by the
combinations of Instagram, LinkedIn, and YouTube, i.e., 14.5%, and stand -alone Instagram was het most
commonly used platform by the respondents, i.e., 12.7%, followed by YouTube, i.e., 5.5%. Most of the
respondents prefer to use more than one social media platform for their convenience. According to the data in
the table above, Instagram and YouTub
e are the respondents' top two social media platforms.
4.3. Reasons for Social Media use
Social Platform Details 1 2 3 4 5 6 Total Score Rank

To research No 37 18 11 15 12 17 110
products or Weight 6 5 4 3 2 1 -- 4.02 3
services Sum 222 90 44 45 24 17 442
No 34 27 24 12 8 5 110
To read news and
Weight 6 5 4 3 2 1 -- 4.47 2
information
Sum 204 135 96 36 16 5 492
To connect with No 46 28 22 14 0 0 110 4.96 1

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Volume:05/Issue:05/May-2023 Impact Factor- 7.868 www.irjmets.com
friends and family Weight 6 5 4 3 2 1 --
Sum 276 140 88 42 0 0 546

To fol low No 11 16 22 26 23 12 110

influencers and Weight 6 5 4 3 2 1 -- 3.36 4
celebrities Sum 66 80 88 78 46 12 370
No 0 9 9 9 28 55 110
Other reasons Weight 6 5 4 3 2 1 -- 1.99 6
Sum 0 45 36 27 56 55 219
To participate in No 0 9 18 18 37 28 110
online Weight 6 5 4 3 2 1 -- 2.48 5
communities or
groups Sum 0 45 72 54 74 28 273

According to the weighted average ranking table, the respondents' primary motivation for using social media
was number one, which was interacting with friends a nd family. Researching goods and services came in third,
reading news and information came in second, and other reasons came in last. This study infers that the
majority of the respondents use social media platforms specifically to connect with friends and
family.
4.4. Investment Products opted by the Respondents
Gender
Investment Products Total
Female Male
Stocks 17 20 37
Stocks, Mutual funds 10 7 17
Mutual funds 11 4 15
Others (Gold, Materials, NPS, Post
-Office ) 5 2 7
Bonds 2 4 6
Stocks, Mutualfunds, Exchange
-traded funds (ETFs),
2 4 6
Bonds
Real Estate 3 2 5
Exchange-traded funds (ETFs) 3 1 4
Stocks, Mutual funds, Exchange
-traded funds (ETFs) 2 2 4
Stocks, Real Estate 2 2 4
Mutual funds, Bonds, Real Estate 0 3 3
Mutual funds, Bonds 1 1 2
Total 58 52 110
ɖ;‡•–•
Value df p Result
ɖ; 32.294 33 0.5021 Not Significant
N 110
The majority of the 110 respondents, both male and female, chose stocks as their investment vehicle, followed
by stocks and mutual funds as well as mutual funds alone. The respondents set restrictions on the remaining
investment options, both individually and collectively. Furthermore, hypothesis testing was conducted using
the Chi-Square statistical tool: there will be no association between gender and selection
of investment sources,
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Volume:05/Issue:05/May-2023 Impact Factor- 7.868 www.irjmets.com
and it was found that the p-value was greater than 0.05, inferring that there will be a high association between
male and female in selecting their investment options.
4.5. Source of Information for Investment Decisions
Source Male Female Total
Company financial reports or filings 14 6 20
Financial advisors or experts 12 3 14
Financial news websites or apps 13 11 24
Other investors or traders 3 10 13
Social media platforms 12 14 26
Television news programs 4 8 12
Grand Total 52 58 110

The above table finds that the majority of the males made their investment decisions using comp any financial
reports, but the females highly depend on social media platforms for their investment decisions. Overall, both
male and female investors were using social media platforms more for their investment decisions, followed by
financial news websites or apps. Television news programs are least preferred by the respondents. The study
infers that now-a-days the majority of them use social media information for their investment decisions.
4.6. Social media platforms useful for investment -related informa tion
Social Media Platform Count % of Grand Total Cumulative %
Facebook 6 5.45% 5.45%
Instagram 52 47.27% 52.73%
LinkedIn 35 31.82% 84.55%
Twitter 17 15.45% 100.00%
Instagram was the most popular (47%) and most useful social media platform preferredybthe respondents for
their investment-related information, followed by LinkedIn (32%), and Twitter was the third most popular
with 15%. Facebook was the least -attracted social media platform that the respondents used for their
investment decisions. The an alysis inferred that Instagram was both influential and useful for investment
-
related information.
ANOVA
df SS MS F Significance F
Regression 1 0.09935619 0.09935619 0.008212108 0.927961854
Residual 108 1306.66428 12.0987433
Total 109 1306.76364

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