The game of lies by stock investors in social media: a study based on city lockdowns in China

Qing Liu (), Hosung Son () and Woon-Seek Lee ()
Additional contact information
Qing Liu: Huainan Normal University
Hosung Son: Pukyong National University
Woon-Seek Lee: Pukyong National University

Financial Innovation, 2024, vol. 10, issue 1, 1-37

Abstract: Abstract The potential hypotheses for finance research based on social media sentiment revolve around the reliability of investor sentiment expressed on social media and the causal relationship between financial markets and this sentiment. The central hypothesis we focus on is derived from the "lie game" played by investors on social media. This study is the first to explore three states of this lie game in the context of the Chinese stock market: the "equilibrium state", the "confusion state", and the "subversion state". Our findings indicate that the "equilibrium" state is the typical state of the lie game, where increased investor sentiment results in more positive market behavior, and higher stock prices lead to increased investor sentiment. We also examine the effect of significant social events, such as the "lockdown in Wuhan" and the "lockdown in Shanghai", on the lie game's outcome. The successful lockdown in Wuhan and the public's opposition to the politicization of COVID-19 reinforced the "equilibrium" state of the game. However, the Shanghai lockdown's failure to promptly halt the spread of COVID-19 led to the intertwining of the economy and COVID-19 in public discourse, shifting the lie game's outcome from an "equilibrium state" to a "subversive state". We emphasize that the "confusion state" and "subversion state" outcomes of the lie game are concerning, and managing public opinion and the externalization of domestic conflicts can help reduce this risk. This study offers a fresh perspective on the traditional issues of investor sentiment reliability and the causal relationship between investor sentiment and stock markets.

Keywords: Lies; Social media; Investor sentiment; Public opinion; Lockdown (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1186/s40854-023-00587-y Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:fininn:v:10:y:2024:i:1:d:10.1186_s40854-023-00587-y

Ordering information: This journal article can be ordered from
http://www.springer. ... nomics/journal/40589

DOI: 10.1186/s40854-023-00587-y

Access Statistics for this article

Financial Innovation is currently edited by J. Leon Zhao and Zongyi

More articles in Financial Innovation from Springer, Southwestern University of Finance and Economics
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().