The democratization of investment research and the informativeness of retail investor trading

• 成果类型: Article
• 署名作者: Farrell, Michael; Green, T. Clifton; Jame, Russell; Markov, Stanimir
• 署名单位: University of Wisconsin System; University of Wisconsin Milwaukee; Emory University; University of Kentucky; University of Texas System; University of Texas Dallas
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.07.018
• 发表日期: 2022
• 页码: 616-641
• 关键词: Investment research; Seeking alpha; RETAIL INVESTORS; Informed trading

摘要

We study the effects of social media on the informativeness of retail trading. Our identification strategy exploits the editorial delay between report submission and publication on Seeking Alpha, a popular crowdsourced investment research platform. We find the ability of retail order imbalances to predict the cross-section of stock returns and cash-flow news increases sharply in the intraday post-publication window relative to the pre-publication window. The findings are robust to controlling for report tone and stronger for reports authored by more capable contributors. The evidence suggests that recent technology-enabled innovations in how individuals share information help retail investors become better informed. (C) 2021 Elsevier B.V. All rights reserved.