Social Media and Digital Collaboration

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Paper Type

Short

Paper Number

1555

Description

This study builds the causal link between the online media and finance market using the context of Chinese stock market. We find that, ranking higher in a typical daily market report causes a stock to have 10% more chance to open higher on the second day than those lower ranked stocks. We further find evidence that this impact of social media reflects a bias rather than a rational expectation, and the effect is stronger when more stocks reach the price limit. However, this effect disappears when investors are given more time to think.

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Dec 14th, 12:00 AM

Online Media Causes Biased Stock Investment: Evidence from a Regression-Discontinuity Design

This study builds the causal link between the online media and finance market using the context of Chinese stock market. We find that, ranking higher in a typical daily market report causes a stock to have 10% more chance to open higher on the second day than those lower ranked stocks. We further find evidence that this impact of social media reflects a bias rather than a rational expectation, and the effect is stronger when more stocks reach the price limit. However, this effect disappears when investors are given more time to think.

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