The Complex Mechanism of Social Networks' Influence on the Behavior of Institutional Investors

Yanzhe Pan

doi:10.62051/ijgem.v4n1.13

Authors

Yanzhe Pan

DOI:

https://doi.org/10.62051/ijgem.v4n1.13

Keywords:

Social network, Institutional investors, Information dissemination, Social capital, Investment decision-making

Abstract

It examines the mechanism of influence on institutional investors by social networks, specifically looking at the dual roles of information dissemination and social capital accumulation. This paper collects financial data, transaction records, and social network data concerning institutional investors. Descriptive statistical analysis and multivariate regression analysis were adopted to test the critical impact of social networks on investment decisions. The results show that information sources and social capital have a significant positive impact on investment amounts. Institutional investors who can obtain direct information sources have significantly increased their investment amounts, and the accumulation of social capital also has a significant promoting effect on investment amounts. Descriptive statistical analysis reveals the differences in the social capital and information sources of different investors on their investment behaviors. Regression analysis further quantifies these effects. It can be seen that information sources and social capital were 200000 and 10000 respectively, while the P value was far less than 0.01, highly significant in general. This paper not only verifies the key role of social network in institutional investors' behavior but provides a very important reference to sponsoring actual investment decisions. It shows how social networks have a significant role in information dispersion and accumulation of social capital on the behavior of guiding institutional investors. This promotes more extensive use of the scope of social network theory applications in the context of finance literature and provides newer perspectives and strategies for institutional investors.

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