Social Media and Financial News Manipulation

Abstract We examine an undercover Securities and Exchange Commission (SEC) investigation into the manipulation of financial news on social media. While fraudulent had a direct positive impact retail trading prices, revelation fraud by SEC announcement resulted in significantly lower volume all news, including legitimate these platforms. For small firms, declined 23.5% price volatility dropped 1.3%. find evidence consistent with concerns causing decline activity volatility, which we interpret through lens capital, attempt to rule out alternative explanations. The results highlight indirect consequences its spillover effects that reduce network’s information dissemination, especially for small, opaque firms.