Research on How Social Media Sentiment Affects the Stock Market

With the rise of social media, investors are increasingly focused on the expression of emotion on social media. Studies have shown that social media sentiment can significantly affect all aspects of the stock market, such as stock yields, trading volume, market volatility, etc. However, there are still some shortcomings, such as a deep understanding of emotional transmission mechanisms, limitations of emotion measure methods, and less research on long-term effects. This paper covers the state of the research and current trends while examining the influence of sentiment on the social media platforms. This review collected 30 related journal articles through a systematic search in the Web of Science and CNKI databases. This paper also summarized the research status and trend of the impact of social media sentiment on the equity market. These studies are significant for investment decision-making, market volatility prediction, and risk management. But it also calls for future research to further explore the emotional communication mechanisms and long-term effects to more fully understand The effect of mood on social media on the equity market.