24 Pages Posted: 9 May 2017
Date Written: May 1, 2017
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 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 outputs 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
Suggested Citation: Suggested Citation
Chen, Hailiang and Hu, Yu Jeffrey and Huang, Shan, Does Monetary Incentive Lead to Better Stock Recommendations on Social Media? (May 1, 2017). Georgia Tech Scheller College of Business Research Paper No. 17-23. Available at SSRN: https://ssrn.com/abstract=2964503 or http://dx.doi.org/10.2139/ssrn.2964503