Investor reliance on the crowd
Subject
Accounting
Publishing details
Social Sciences Research Network
Authors / Editors
Lawrence A;Ryans J;Sun E;Soni A
Publication Year
2017
Abstract
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.
Keywords
Investor reliance; Crowd information; Negative returns; Uncertainty; Information environment
Series Number
2945411
Series
Social Sciences Research Network
Available on ECCH
No
