Effect of Media on the Behaviour of Investors and Stocks

Abstract

Media has a significant influence on the behaviour of the people. Through constant persuasion, media can change the decisions and beliefs of the public. This persuasion power is applied to the investors also. Investment decisions are tough and complicated. Investors wish for fancy returns instantly from the stock market but they are risk-averse too. This greed of instant gratification and fear of losing the principal amount compel them to seek experts’ advice. Through discussions about economic policies, companies annual reports and global markets media provide the information required for investment, and through stock recommendation, it persuades the investors to invest in specific stocks. Investors under the influence of biases like herding, authority bias and context effect consciously or subconsciously fall into the trap of media experts. They make investment decisions. Their decision influence the movement and trade volume of the stocks. Biased investors decision results into the misbehaviour of stocks. This paper tries to unveil the influence of media on the behaviour of investors and stocks. It also tries to strengthen the theoretical background of the relationship between media, investors and stocks. The study has tried to evolve the mediator effect of investors’ be-haviour between the media and the behaviour of the stock. The paper is highly beneficial for investors. It educates them about various biases that are triggered by media. It will also help them in identifying the influence of media on the movement of the stocks