The Impact of Social Media Users’ Sentiment on Financial Markets

Faculty of Business, University of Macao, Macao, China

^* Corresponding author: bc20923@um.edu.mo

Abstract

This article aims to comprehensively and deeply review and analyze the multifaceted impact of social media user emotions on financial markets. In the field of financial research in the past, emotional factors have been widely recognized by many scholars as key elements in the investor decision-making process. This article further analyzes the transmission mechanism of social media users’ emotions, that is, how it indirectly affects the performance of financial markets by influencing the formation and dissemination process of mass media emotions. At the same time, the article also explores in detail the specific ways in which social media users’ emotions directly affect the stock market. In addition, this article also focuses on the dual role of social media in emotion generation and emotion filtering processes, and explores in depth the application value of Granger causality research in this field. Finally, this article critically examines data bias and the limitations of sentiment analysis methods, and explores the potential applicability of these research findings under different market conditions.