Financial Analysis on Social Media and Disclosure Processing Costs: Evidence from Seeking Alpha

• 成果类型: Article
• 署名作者: Gomez, Enrique A.; Heflin, Frank; Moon Jr, James R.; Warren, James D.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University; University System of Georgia; University of Georgia; University System of Georgia; Georgia Institute of Technology; Texas A&M University System; Texas A&M University College Station; Mays Business School
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0659
• 发表日期: 2024
• 页码: 223-246
• 关键词: market liquidity; INFORMATION; dissemination; announcement; attention; traders; wisdom; CROWDS

摘要

Less-informed investors face greater costs of processing earnings news into actionable information. Our findings suggest financial analysis on social media reduces less-informed investors' disclosure processing costs. We document an attenuated spike in earnings announcement (EA) information asymmetry for quarters containing more financial analysis on social media in the weeks prior to the EA. Cross-sectional evidence suggests this finding is stronger when coverage from traditional intermediaries is lower, for financial analyses written by more credible authors, and for financial analyses that are more likely relevant to evaluating the EA. Further evidence suggests retail trades, but not institutional trades, at EAs are significantly more profitable in quarters with greater financial analysis on social media, consistent with financial analysis on social media benefitting traders who are otherwise less-informed. Overall, our evidence suggests that financial analysis on social media plays an important role in aiding less-informed investors by helping them better process EA news.