Wisdom of Crowds: The Value of Stock Opinions Transmitted Through Social Media

Social media has become a popular venue for individuals to share the results of their own analysis on financial securities. This paper investigates the extent to which investor opinions transmitted through social media predict future stock returns and earnings surprises. We conduct textual analysis...

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Bibliographic Details
Published inThe Review of financial studies Vol. 27; no. 5; pp. 1367 - 1403
Main Authors Chen, Hailiang, De, Prabuddha, Hu, Yu (Jeffrey), Hwang, Byoung-Hyoun
Format Journal Article
LanguageEnglish
Published Oxford Oxford University Press 01.05.2014
Oxford Publishing Limited (England)
Subjects
Analytical forecasting
Business structures
Coefficients
Content analysis
Earnings
Earnings forecasting
Financial services
Investment analysis
Investors
Personal finance
Rates of return
Recommendations
Search engines
Securities analysis
Social media
Social networks
Stock prices
Stock returns
Studies
U.S.A
Variable coefficients
United States > US
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Summary:Social media has become a popular venue for individuals to share the results of their own analysis on financial securities. This paper investigates the extent to which investor opinions transmitted through social media predict future stock returns and earnings surprises. We conduct textual analysis of articles published on one of the most popular social media platforms for investors in the United States. We also consider the readers' perspective as inferred via commentaries written in response to these articles. We find that the views expressed in both articles and commentaries predict future stock returns and earnings surprises.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0893-9454
1465-7368
DOI:10.1093/rfs/hhu001