The Influence of Social Media on Investment Decisions in the Capital Market (A Study of Students Active in Stock Investment)

Gema Merdeka Goeyardi; Chriestine Ayu Ashari; Agus Sukoco

Authors

Gema Merdeka Goeyardi Universitas Narotama, Surabaya, Indonesia
Chriestine Ayu Ashari Universitas Narotama, Surabaya, Indonesia
Agus Sukoco Universitas Narotama, Surabaya, Indonesia

Keywords:

Investment Decisions, Social Media, Capital Market, Student Investors, Stocks.

Abstract

This study aims to examine and analyze the influence of social media usage on capital market investment decisions among university students in Bandung who are actively investing in stocks. The rapid digitalization of financial information on social media has become a primary driver of young investors' behavior; however, it also carries the potential to trigger the "Fear of Missing Out" (FOMO) phenomenon and speculative behavior. A quantitative approach utilizing an associative causality design was employed. Primary data were collected via online questionnaires using purposive sampling, targeting 100 active student investors who use social media. Data analysis was conducted using SmartPLS software through the Structural Equation Modeling-Partial Least Squares (SEM-PLS) approach. The structural model evaluation reveals that social media usage has a positive and significant effect on students' investment decisions, with a path coefficient of 0.660, a t-statistic of 8.742, and a significance level (p-value) of 0.000. The social media usage variable explains 43.6% of the variance in investment decisions (R² = 0.436). These findings indicate that while the flow of digital information accelerates transaction execution, "bounded rationality" renders young investors susceptible to heuristic biases. Therefore, strengthening rational financial literacy is crucial to balancing the digital inclusion of the capital market.

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