Discussion paper

DP18445 Social Media and Stock Market Participation

We investigate the effect of social media adoption on stock market participation in the United States. Using plausibly exogenous variation in the early adoption of Twitter across counties, we show that a 10% increase in social media usage is associated with a 2.5% higher rate of stock ownership and an overall increase in stock market wealth. Consistent with the notion of social media as an information channel, we find greater effects in counties with lower levels of pre-existing stock market knowledge and a decline in the number of financial advisors. Twitter adoption also fuels interest in "meme stocks," which tend to be more volatile and owned by retail investors. Overall, our results suggest a substantial impact of modern information technology on financial markets.


Müller, K, Y Pan and C Schwarz (2023), ‘DP18445 Social Media and Stock Market Participation‘, CEPR Discussion Paper No. 18445. CEPR Press, Paris & London. https://cepr.org/publications/dp18445