Monetary Incentive and Stock Opinions on Social Media

Journal of Management Information Systems (JMIS), Forthcoming

41 Pages Posted: 9 May 2017 Last revised: 3 Feb 2019

See all articles by Hailiang Chen

Hailiang Chen

HKU Business School

Yu Jeffrey Hu

Georgia Institute of Technology - Scheller College of Business

Shan Huang

University of Washington - Michael G. Foster School of Business

Date Written: February 2, 2019

Abstract

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 online investor communities. We find that monetary incentive is effective in increasing the amount of content output and generating more interest from the community as well, but it leads to neither better nor worse 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 the role of monetary incentive in stimulating the sharing of value-relevant information by investors in social media communities.

Keywords: monetary incentive, stock opinions, social media, wisdom of crowds, investment

Suggested Citation

Chen, Hailiang and Hu, Yu Jeffrey and Huang, Shan, Monetary Incentive and Stock Opinions on Social Media (February 2, 2019). Journal of Management Information Systems (JMIS), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2964503 or http://dx.doi.org/10.2139/ssrn.2964503

Hailiang Chen (Contact Author)

HKU Business School ( email )

K. K. Leung Building
University of Hong Kong
Hong Kong

HOME PAGE: http://www.fbe.hku.hk/people/academic/hailiang-chen

Yu Jeffrey Hu

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Shan Huang

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States
2066166638 (Phone)
98125 (Fax)

HOME PAGE: http://www.shanhhuang.com/

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