A Study on the Impact of Fake News on Social Media Sentiment and Stock Market Movements

EasyChair Preprint 14903

Abstract

The rapid proliferation of fake news on social media platforms has raised concerns about its influence on public sentiment and financial markets. This study investigates the impact of fake news on social media sentiment and subsequent stock market movements. Using a combination of sentiment analysis and event studies, this research explores how misinformation affects investor behavior, leading to stock price volatility and market fluctuations. The study utilizes data from various social media platforms, applying natural language processing (NLP) techniques to assess sentiment shifts in response to fake news events. Stock market data, including price changes and volatility, are analyzed to establish a correlation between misinformation-induced sentiment and market behavior.

Findings suggest that fake news significantly influences public sentiment, often leading to emotional contagion and herding behavior, which contributes to short-term market volatility. This study provides insights into the mechanisms by which fake news disrupts financial markets and offers recommendations for investors, regulators, and policymakers to mitigate the adverse effects of misinformation. The results highlight the need for improved detection and management of fake news to safeguard market stability. Further research is encouraged to explore broader economic impacts and the role of technology in countering misinformation.

Keyphrases: Sentiment Analysis, Stock Market Behavior, fake news, social media sentiment

@booklet{EasyChair:14903,
  author    = {Ayuns Luz and Godwin Olaoye and Edwin Frank},
  title     = {A Study on the Impact of Fake News on Social Media Sentiment and Stock Market Movements},
  howpublished = {EasyChair Preprint 14903},
  year      = {EasyChair, 2024}}