Instagram Content Publishing and Its Effect on Stock Prices for Swedish Firms : A multiple case study on the economic effect of social media publishing for firms

Abstract: Background. Instagram as a social media platform is used by firms as both a com- munication, marketing and promotion tool. In analyses of firms on Twitter, several authors have found connections between positive changes in stock returns and posts on Twitter regarding the firm, both from and about the firm. The research on Twit- ter is clear on the power of external and internal usage of Twitter on firm’s stocks. This thesis extends the Twitter research to Instagram. By considering a new post made on Instagram by a firm as an event, inferential tests on whether or not the post had any significant effect on the stock value for that firm were established. Objectives. This thesis aims to relate stock value changes to the publishing dates of Instagram posts for firms in the Swedish stock market. Consequently, the hypothesis to falsify is that Instagram content publishing has no effect on stock values for firms in the Swedish stock market. Methods. Both a literature review and a synthetic control group methodology is utilised. The literature review builds the foundation for selection of Instagram pub- lishing events and some of the assumptions necessary for the data analysis. The synthetic control group method allows for inferential analysis of the data by con- structing a weighted non-correlated dataset for the group under purview. Results. For four of the thirteen firms chosen in this thesis, statistical significance was found by the means of placebo t-tests. Conclusions. Signalling theory, valuation theory and the underlying assumption of market efficiency contribute to the effect to which Instagram content publishing may have on stock prices after the publishing date. The effect is potentially relevant as an indicator for investors due to the rejection of this thesis’ null hypothesis for four of the thirteen firms. However, nine cases could not reject the null hypothesis, which indicates that the effect may be negligible.