The Internet as an Information Intermediary

Posted: 23 Mar 2017

See all articles by Michael S. Drake

Michael S. Drake

Brigham Young University - Marriott School

Jacob R. Thornock

Brigham Young University

Brady J. Twedt

University of Oregon - Lundquist College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: March 20, 2017


The internet is an enormous and growing source of information for investors about the opinions of others. Virtually any individual with internet access can express opinions about firms and editorialize about company news. However, to date we know very little about the impact these nontraditional internet intermediaries have on markets. We develop a framework wherein internet information intermediaries fall along a spectrum of professionalism and document a nuanced relationship between coverage by these intermediaries and capital market effects. Using a novel dataset that tracks coverage of companies by individuals posting on thousands of websites, we find that coverage by professional and semi-professional intermediaries is associated with positive capital market effects but coverage by nonprofessional internet intermediaries has the opposite effect — hindering price formation. The detrimental effects of nonprofessional coverage are observed most strongly when the intermediaries have larger audiences.

Keywords: information dissemination, internet, web coverage, price formation, earnings announcements

JEL Classification: G12, G14, M41

Suggested Citation

Drake, Michael S. and Thornock, Jacob and Twedt, Brady J., The Internet as an Information Intermediary (March 20, 2017). Review of Accounting Studies, Forthcoming, Kelley School of Business Research Paper No. 17-22, Available at SSRN:

Michael S. Drake (Contact Author)

Brigham Young University - Marriott School ( email )

United States

Jacob Thornock

Brigham Young University ( email )

Provo, UT 84602
United States
8014220828 (Phone)

Brady J. Twedt

University of Oregon - Lundquist College of Business ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

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