Acta Univ. Agric. Silvic. Mendelianae Brun. 2015, 63, 1229-1234

https://doi.org/10.11118/actaun201563041229
Published online 2015-09-02

The Impact of Economic Agents Perceptions on Stock Price Volatility

Jaroslav Bukovina

Department of Finance, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

This paper studies perceptions of economic subjects and its impact on stock prices. Perceptions are represented by stock market indexes and Facebook activity. The contribution of this paper is twofold. In the first place, this paper analyzes the unique data of Facebook activity and proposes the methodology for employment of social networks as a proxy variable which represents the perceptions of information in society related to the specific company. The second contribution is the proposal of potential link between social network principles and theories of behavioral economics. Overall, the author finds the negative impact of Facebook activity on stock prices and the positive impact of stock market indices. The author points the implications of findings to protection of company reputation and to investment strategy based on the existence of undervalued stocks.

Funding

I gratefully acknowledge the support of the Internal Grant Agency of Mendel University and project 28/2013 with the name The impact of information on capital markets after the financial crisis. I would like to thank to participants at the 2014 World Finance & Banking Symposium held in Singapore for their helpful comments.

References

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