Does Interaction on Social Media Increase or Moderate Extremeness?

69 Pages Posted: 8 Jul 2021 Last revised: 7 Sep 2021

See all articles by Devin M. Shanthikumar

Devin M. Shanthikumar

University of California, Irvine - Paul Merage School of Business

Annie Qiao Wang

University of California, Irvine - Accounting Area

Shijia Wu

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics

Date Written: June 1, 2020

Abstract

Using comment streams on Seeking Alpha articles, we examine whether interacting on social media increases or moderates the extremeness of investors’ opinions. Unlike some findings from political science that show social media increases extremeness of opinions, we find that interaction on Seeking Alpha moderates extremeness. Comments become less extreme over the sequence of comments for a given article, as well as within individual comment sub-threads, and over a single user’s comments for a given article. Extremeness reduction is stronger when the article itself is more moderate, and when more users are self-identified (i.e., not anonymous). Results also suggest that the extremeness reduction triggered by Seeking Alpha interaction has capital market implications. Differences of opinion captured by stock-based measures, abnormal volume and turnover, decrease significantly after the release of Seeking Alpha articles with comments. Our results provide the first evidence of the effect of social media interaction on the updating of individuals’ opinions.

Keywords: social media, financial intermediaries, extremeness, sentiment, interaction, social finance

JEL Classification: G29, G41, M41

Suggested Citation

Shanthikumar, Devin M. and Wang, Qiao and Wu, Shijia, Does Interaction on Social Media Increase or Moderate Extremeness? (June 1, 2020). Available at SSRN: https://ssrn.com/abstract=3879175 or http://dx.doi.org/10.2139/ssrn.3879175

Devin M. Shanthikumar (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
SB2 428
Irvine, CA 92697-3125
United States

Qiao Wang

University of California, Irvine - Accounting Area ( email )

Irvine, CA 92697-3125
United States

Shijia Wu

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics ( email )

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