Wisdom of Crowds: The Value of Stock Opinions Transmitted Through Social Media
City University of Hong Kong - Department of Information Systems
Purdue University - Krannert School of Management
Yu Jeffrey Hu
Georgia Institute of Technology - Scheller College of Business
Cornell University - Dyson School of Applied Economics and Management; Korea University - Department of Finance
December 8, 2013
Review of Financial Studies (RFS), Forthcoming
Social media has become a popular venue for individuals to share the results of their own analysis on financial securities. This paper investigates the extent to which investor opinions transmitted through social media predict future stock returns and earnings surprises. We conduct textual analysis of articles published on one of the most popular social-media platforms for investors in the United States. We also consider the readers’ perspective as inferred via commentaries written in response to these articles. We find that the views expressed in both articles and commentaries predict future stock returns and earnings surprises.
Number of Pages in PDF File: 52
Keywords: Investor-turned-advisors, Social media, Financial markets
JEL Classification: G11, G12, G14
Date posted: April 12, 2011 ; Last revised: August 18, 2014
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