Do Retail Investors Matter?

52 Pages Posted: 10 Jun 2021

See all articles by Shibo Bian

Shibo Bian

Shanghai Lixin University of Commerce - School of Accounting and Finance

Feng Li

Shanghai Advanced Institute of Finance, Shanghai Jiaotong University

Zhipeng Yan

New Jersey Institute of Technology

Date Written: June 7, 2021

Abstract

We study the role of retail investors in information discovery and dissemination. Using a unique textual dataset of mandatory online “earnings communication conferences” from China, we find that stock market reaction and future firm performance are positively associated with the tone of questions asked by retail investors in the conferences. When managers dodge the questions from retail investors, as indicated by the high degree of content dissimilarity between investors’ questions and mangers’ answers, the market reacts less favorably and future earnings deteriorates. The effects are stronger for firms with less analyst coverage. Overall, the evidence suggests that retail investors could contribute to the information discovery process by asking value-relevant questions.

Suggested Citation

Bian, Shibo and Li, Feng and Yan, Zhipeng, Do Retail Investors Matter? (June 7, 2021). Available at SSRN: https://ssrn.com/abstract=3861763 or http://dx.doi.org/10.2139/ssrn.3861763

Shibo Bian

Shanghai Lixin University of Commerce - School of Accounting and Finance ( email )

No.2800,Wenxiang Road,Songjiang District, Shanghai
Shanghai, 201620
China

Feng Li

Shanghai Advanced Institute of Finance, Shanghai Jiaotong University ( email )

211 West Huaihai Road
Shanghai, Shanghai 200030
China

Zhipeng Yan (Contact Author)

New Jersey Institute of Technology ( email )

United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
92
Abstract Views
401
rank
344,359
PlumX Metrics