The Impact of Social Media Influence on Investor Behavior and Purchase Intention in the Indian Stock Market

Abstract

In spite of the fast rise in participation of retail investors in the Indian stock market through social media, the available body of literature on the topic has not tried to disentangle which of the above-mentioned elements of 'social media influence' drive investment actions. The purpose of this study was to analyze how social media affects investors and, more precisely, to find out which of the social media-related elements are strong predictors of purchase intention among retail investors in the Indian stock market. A descriptive-cum-analytical approach was used for this study and primary data were collected from 202 retail investors using structured five-point Likert scale questionnaire employing non-probability or convenience purposive sampling method. Social Media Exposure, Perceived Content Credibility, Trust, Social Media Engagement and Herding Behaviour were considered as independent constructs while Purchase Intention was considered as the dependent construct. The data collected in SPSS software underwent analysis based on descriptive statistics, Cronbach's Alpha, Exploratory Factor Analysis, Pearson correlation and multiple linear regression analysis. It was found that all six constructs had acceptable-to-good reliability and each of the independent constructs had positive and significant correlation with Purchase Intention. However, the regression analysis revealed a model to be significant with F(5,196)= 25.410, p < .001, which accounted for 39.3 percent of the variance in Purchase Intention. Among independent constructs, Trust and Social Media Engagement emerged as the two significant individual predictors while Exposure, Credibility and Herding, though having positive correlation with Purchase Intention, lost their significance when other variables were controlled for. Thus, platforms and regulators can expect more benefits out of developing verifiable trust and engaging investors than just increasing exposure of investment content. Keywords: Social Media Exposure; Perceived Content Credibility; Trust; Social Media Engagement; Herding Behaviour; Purchase Intention; Retail Investors; Indian Stock Market t.