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

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