Wisdom of Crowds: The Value of Stock Opinions Transmitted Through Social Media
June 5, 2014 Leave a comment
Wisdom of Crowds: The Value of Stock Opinions Transmitted Through Social Media
Hailiang Chen
Prabuddha De
Yu (Jeffrey) Hu
Byoung-Hyoun Hwang
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