Online Talk: Does It Matter At All?

Abstract

So far, we have looked into how online chats impact stock trading, including returns, volatility, volume, and liquidity in the previous chapters. Scholars are also interested in whether online talk significantly influences a firm’s value and reputation in general. If online talk is just background noise, we would expect stagnation or reduction in the number of message boards and participants. However, the emergence of an increasing number of active stock message boards and users indicates that online chats are not just noise (Antweiler and Frank 2004). Understanding how online chats impact stock trading helps practitioners, researchers, and policymakers understand and gauge how online stock recommendations will change investors’ trading decisions and sentiments, ultimately impacting firms’ values.