Informed investors and the Internet

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Informed investors and the Internet
Authors: Amir Rubin, Eran Rubin [edit item]
Citation: Journal of Business Finance & Accounting 37 : 841-865. 2010.
Publication type: Journal article
Peer-reviewed: Yes
Database(s):
DOI: 10.1111/j.1468-5957.2010.02187.x.
Google Scholar cites: Citations
Link(s): Paper link
Added by Wikilit team: Added on initial load
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Informed investors and the Internet is a publication by Amir Rubin, Eran Rubin.


[edit] Abstract

During the last decade the Internet has become an increasingly important source for gathering company related information. We employ Wikipedia editing frequency as an instrument that captures the degree in which the population is engaged with the processing of company-related information. We find that firms whose information is processed by the population more frequently are associated with lower analysts' forecast errors, smaller analysts' forecast dispersions, and significant changes in bid-ask spreads on analysts' recommendation days. These results indicate that information processing over the Internet is related to the degree to which investors and analysts are informed about companies.

[edit] Research questions

"During the last decade the Internet has become an increasingly important source for gathering company related information. We employ Wikipedia editing frequency as an instrument that captures the degree in which the population is engaged with the processing of company-related information."

Research details

Topics: Other participation outcomes, Commercial aspects [edit item]
Domains: Business [edit item]
Theory type: Analysis, Explanation [edit item]
Wikipedia coverage: Main topic [edit item]
Theories: "Hypothesis1: Edit frequencies on firms’ Wikipedia entries are negatively correlated with analysts’ forecast errors.

Hypothesis2: Edit frequencies on firms’ Wikipedia entries are negatively correlated with analysts’ forecast dispersions. Hypothesis3: Edit frequencies on firms’ Wikipedia entries are positively correlated with changes in bid-ask spreads on analysts’ recommendation days.


In contrast, the Internet provides a theoretically limitless news hole of up-to-date, mostly raw information that is available whenever the user wants it." [edit item]

Research design: Case study, Experiment, Statistical analysis [edit item]
Data source: Experiment responses, Wikipedia pages [edit item]
Collected data time dimension: Longitudinal [edit item]
Unit of analysis: Edit [edit item]
Wikipedia data extraction: Live Wikipedia [edit item]
Wikipedia page type: Article, History [edit item]
Wikipedia language: Not specified [edit item]

[edit] Conclusion

"We hypothesize that more Internet information processing pertaining to a company would result in analysts and investors that are more informed about that company. To test our hypothesis we conduct empirical experiments that relate the frequency of edits of Dow Jones Industrial firms’ entries on Wikipedia to analysts’ forecasts and recommendations. We find that with higher Wikipedia edit frequencies, analysts’ forecast errors and forecast dispersions are reduced. Further, we find that higher Wikipedia edit frequencies are correlated with increases in bid-ask spread following analysts’ recommendation. These results are consistent with the idea that Internet information processing is correlated with the degree to which investors and analysts are informed about companies."

[edit] Comments

""We hypothesize that more Internet information processing pertaining to a company would result in analysts and investors that are more informed about that company... With higher Wikipedia edit frequencies, analysts’ forecast errors and forecast dispersions are reduced." p. 863"


Further notes[edit]