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Investor reliance on the crowd



Publishing details

Social Sciences Research Network

Authors / Editors

Lawrence A;Ryans J;Sun E;Soni A

Publication Year



Using Yahoo Finance search data, we document that when investors search for investment information they by far and large rely on the information of crowds. The results indicate that this reliance significantly varies across industries, and is most pronounced in firms with greater uncertainty and weaker information environments. Moreover, significant increases in the reliance on message boards consistently predict future negative stock returns and increases in information asymmetry, suggesting that investors’ increasing reliance on crowds provides insights into their expectations of firm performance and future sell-offs.


Investor reliance; Crowd information; Negative returns; Uncertainty; Information environment

Series Number



Social Sciences Research Network

Available on ECCH


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