The Influence of Social Media on Investment Decisions Among Millennials and Generation Z

Abstract

The rapid growth of digital technology has transformed how Millennials and Generation Z access investment information and make investment decisions. Social media platforms increasingly function not only as communication tools but also as sources of investment information, recommendations, and market sentiment that may shape investor behavior. This study aims to examine the influence of social media on investment decisions among Millennials and Generation Z through investor behavioral biases, including herding behavior, overconfidence bias, anchoring bias, and availability bias. A quantitative approach was employed using a survey method involving 298 respondents selected through purposive sampling. Data were analyzed using Partial Least Squares Structural Equation Modeling. The findings reveal that social media significantly influences investor behavioral biases and investment decisions. Herding behavior negatively affects investment decisions, while availability bias positively affects investment decisions. In contrast, overconfidence bias and anchoring bias do not significantly influence investment decisions. The findings further indicate that herding behavior and availability bias mediate the relationship between social media and investment decisions. This research contributes to the behavioral finance literature by integrating herding behavior, overconfidence bias, anchoring bias, and availability bias into a unified framework for explaining how social media influences investment decisions among Millennials and Generation Z. The findings imply the importance of improving digital financial literacy so that young investors can make more rational and critical investment decisions when exposed to information on social media.