User Anonymity and Information Quality of Social Media: Evidence from a Natural Experiment

51 Pages Posted: 11 Jul 2024

See all articles by Kanyuan (Kevin) Huang

Kanyuan (Kevin) Huang

Chinese University of Hong Kong, Shenzhen

Yakun Wang

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

T.J. Wong

University of Sothern California

Tianyu Zhang

The Chinese University of Hong Kong (CUHK)

Date Written: July 05, 2023

Abstract

We examine how removing user anonymity affects the quality of information on investmentrelated social media platforms. Using a difference-indifferences research design that exploits the differential timing of adopting real-name verification policies by the two most popular investmentrelated platforms in China, we find that the information quality of the treatment platform significantly improves after the implementation of the policy. This result is primarily driven by users who post more actively in the pre-period. These users become less active in the post-period but the content of their postings become more informative, indicating that the verification policy encourages them to be more prudent in expressing opinions. Additionally, our results are more pronounced in firms that tend to attract the attention of retail investors. Our study suggests that real-name verification policies can have disciplinary effects on internet users, improving the information quality on investment-related social media.

Keywords: social media, user anonymity, real-name verification, wisdom of crowds, retail investor, earnings announcements User Anonymity and Information Quality of Social Media: Evidence from a Natural Experiment JEL classification: G14, G41, M41 Keywords: social media, user anonymity, real-name verification, wisdom of crowds, retail investor, earnings announcements

Suggested Citation

Huang, Kanyuan and Wang, Yakun and Wong, T.J. and Zhang, Tianyu, User Anonymity and Information Quality of Social Media: Evidence from a Natural Experiment (July 05, 2023). Available at SSRN: https://ssrn.com/abstract=4885972 or http://dx.doi.org/10.2139/ssrn.4885972

Kanyuan Huang

Chinese University of Hong Kong, Shenzhen ( email )

2001 Longxiang Boulevard, Longgang District
Shenzhen, 518172

Yakun Wang

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

2001 Longxiang Road, Longgang District
Shenzhen, 518172
China

Shenzhen Finance Institute ( email )

T.J. Wong (Contact Author)

University of Sothern California ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

Tianyu Zhang

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong

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