The Role of Online Freelance Stock Analysts in Correcting Overly Pessimistic Market Sentiment

Managerial Finance, Vol. 44 (8), pp.954-971, 2018.

Posted: 22 Aug 2018

See all articles by Myungsun Kim

Myungsun Kim

SUNY at Buffalo

Robert Kim

University of Massachusetts Boston

Onook Oh

University of Colorado at Denver

H. Raghav Rao

University of Texas at San Antonio

Date Written: August 9, 2018

Abstract

We examine the role of online freelance stock analysts in correcting mispricing of hard-to-value firms during sentiment-driven market periods. We analyze the tone of stock articles posted in SeekingAlpha.com. The analysis reveals that the degree of negative tone of their stock articles is related to 3-day stock returns around the article posting dates. It further reveals that the relation between these returns and prevailing market sentiment depends on firm-specific susceptibility to the market sentiment. The 3-day stock returns are higher during low market sentiment periods for firms that are more susceptible to the market sentiment, hence, harder to value. The tone of the stock articles during low sentiment periods also predicts the news in the forthcoming earnings. Overall, our findings help stock investors identify value-relevant information provided by online freelance stock analysts, particularly for hard-to-value stocks and during the low market sentiment period.

Keywords: Market Sentiment, Market Guidance, Negative Tone, Online Stock Analysts

Suggested Citation

Kim, Myungsun and Kim, Robert and Oh, Onook and Rao, H. Raghav, The Role of Online Freelance Stock Analysts in Correcting Overly Pessimistic Market Sentiment (August 9, 2018). Managerial Finance, Vol. 44 (8), pp.954-971, 2018.. Available at SSRN: https://ssrn.com/abstract=3229567

Myungsun Kim

SUNY at Buffalo ( email )

Buffalo, NY 14260
United States
716-645-7900 (Phone)

Robert Kim (Contact Author)

University of Massachusetts Boston ( email )

100 Morrissey Blvd.
College of Management
Boston, MA 02125
United States

HOME PAGE: http://ssrn.com/author=1376774

Onook Oh

University of Colorado at Denver ( email )

H. Raghav Rao

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States

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