Monetary Incentive and Crowd-sourced Equity Research
30 Pages Posted: 9 May 2017 Last revised: 20 Feb 2018
Date Written: February 2018
Social media not only is a new channel to obtain financial market information but also becomes the venue for investors to share and exchange investment ideas. We examine the performance consequences of providing monetary incentive to both existing and new amateur analysts on social media and its implications for crowd-sourced equity research. We find that monetary incentive is effective in increasing the amount of content output but does not lead to better stock recommendations. Additional analysis suggests that monetary incentive results in wider stock and industry coverage, a sign of increased content diversity. This study contributes to the understanding of incentive mechanisms for social media communities in the financial context.
Keywords: Monetary Incentive, Blog, Wisdom of Crowds, Stock Market, Investment
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