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For centuries, media content, particularly films, has been a major source of entertainment and controversy worldwide. Producers, scriptwriters, directors, actors, and other crew members put months and years of hard work into telling a compelling story that resonates with the general populace. Films have been attributed to a series of changes in the psychological behavior of their audience. Some have often portray starting crypto exchage business as very profitable and motivated others to do same.
Numerous films, both finance and non-finance-related, have been made over the years. Finance-related films like the famous 2014 “Wolf of the Wall Street," the 2013 "Arbitrage," and the 2016 “The Big Short”, have been widely loved by audiences across the globe because they made financial jargon more relatable and understandable for their audience. Is there any link between the love for finance films and investment decisions? Do non-finance-related films also influence market sentiments?
Studies and academic research have linked investors' sentiments with stock fluctuations. Taking a step beyond that, they have also revealed that movie exposure alters the viewer's mood and behavior, and consequently, their sentiments. Research discovered that “high box office takings for action-adventure movies lead to a two-basis-point rise in next-day stock market return." Similar studies have also revealed that certain stocks (volatile, small-scale, unprofitable, and new) are susceptible to the effects of movie sentiments.
Let’s discuss how the emotions investors are exposed to affect their investment decisions. Film genres like action adventure and thrillers are known to invoke emotions in people that enhance feelings of risk-taking in them. This increases their likelihood of speculating and, consequently, making impromptu investment decisions.
Films that spark ethical and moral dilemma controversies also have a lot of influence on investors. The conversations around the ethical-appropriateness of certain actions of institutions easily become trending topics, feeding into sensationalism and even shaping investors' sentiments on trading certain stocks in anticipation of public reaction.
Another important factor is how the film industry is an industry with a lot of investment potential. Films with high ratings or cinema views are usually celebrated as successful. Some famous producers and directors are perceived to be a recipe for “blockbusters”. This sentiment influences investors’ decisions to invest more in their subsequent projects.
The glamor associated with successful A-list blockbuster actors is also an important factor influencing the market. Film stars are popular for being influencers and ambassadors of many successful listed companies. Taking advantage of the publicity post-release of successful films, many companies have the opportunity to shove their brands in the face of the audience. Thus, impacting publicity, general public sentiment on those companies, and consequently investors’ decision-making.
Finance-based movies are another interesting genre that drive investor’s behavior. Many films, like the aforementioned ones portray the financial market and its participants negatively.
Financial market and finance professions are portrayed as deceitful and unreliable, and hidden practices like corruption, insider trading, and market manipulation are exposed. These negative impressions have been linked to a reduction in investors’ confidence in the financial markets.
In a more positive light, finance-based films that educate the audience on business and investment decisions have been linked to increased interest in investments and better investment decision making.
They make complex finance jargons understandable and interesting. They also often portray starting crypto exchange business as extremely profitable. Therefore, they often encourage trading enthusiasts and new investors into the market.