Abstract
This paper is designed to investigate in detail the way top traded firms of India use social media (SM) and how it influences their stock prices. The purpose of this paper is to observe whether there exists any relationship between the SM usage and the company’s stock price. This paper relates NSE stock price trends of each firm with its SM usage and SM popularity, using tools such as correlation, regression and ANOVA. For the database, SM activities of NIFTY 51 firms, such as monthly number of posts and monthly number of replies to users, were recorded on the four SM platforms: Facebook, Youtube, Twitter and LinkedIn. This paper draws a conclusion with an assertion about the extent to which a firm should give importance to investing money in SM adoption strategies, SM marketing strategies, SM customer care strategies and so on.
1. Introduction
Social media (SM) has impacted the world extensively. It has reduced the communication barriers to a great extent. It represents a piece of information technology that can affect business both outside and inside a firm. Today, Facebook’s daily number of active users is an incredible 1.3 billion worldwide. SM is revolutionizing today’s world [1]. These SM platforms today have a very widespread reach to potential customers for a vast variety of businesses. More importantly, this widespread reach has increased exponentially over the years and is expected to grow in a similar fashion in future [2].
5. Implications and conclusion
The conclusion that can be drawn from all the above observations and analyses is that there is no satisfactorily explainable or mathematically expressible relationship between the stock prices of firms and their respective SM activities. Previous papers did not note the influence of SM on stock prices from the firm’s point of view, most of them either correlated SM outbursts not in a firm’s control with its stock prices, or they gave the credit for changing stock prices to SM adoption strategies the firm had undertaken, when it actually went to the underlying well-marketed new venture of the firm rather than only SM. It can now be asserted that although SM has sometimes proven to be very crucial in the changes occurring to stock prices, the firms should not worry too much about how they are handling their SM accounts on Facebook, Twitter, LinkedIn and YouTube. They should only carry out the mandatory practices, essential awareness and marketing schemes that nowadays every firm does. The probability is slight that the firm investing a large portion of its money into SM will get a spike in its stock prices because of its sole SM effort.
