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Informed investors and the Internet
Abstract During the last decade the Internet has beDuring 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.and analysts are informed about companies.
Added by wikilit team Added on initial load  +
Collected data time dimension Longitudinal  +
Comments "We hypothesize that more Internet informa"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 forecast dispersions are reduced." p. 863
Conclusion We hypothesize that more Internet informatWe 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.and analysts are informed about companies.
Data source Experiment responses  + , Wikipedia pages  +
Doi 10.1111/j.1468-5957.2010.02187.x +
Google scholar url http://scholar.google.com/scholar?ie=UTF-8&q=%22Informed%2Binvestors%2Band%2Bthe%2BInternet%22  +
Has author Amir Rubin + , Eran Rubin +
Has domain Business +
Has topic Other participation outcomes + , Commercial aspects +
Pages 841-865  +
Peer reviewed Yes  +
Publication type Journal article  +
Published in Journal of Business Finance & Accounting +
Research design Case study  + , Experiment  + , Statistical analysis  +
Research questions During the last decade the Internet has beDuring 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.processing of company-related information.
Revid 10,830  +
Theories Hypothesis1: Edit frequencies on firms’ WiHypothesis1: 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.t is available whenever the user wants it.
Theory type Analysis  + , Explanation  +
Title Informed investors and the Internet
Unit of analysis Edit  +
Url http://dx.doi.org/10.1111/j.1468-5957.2010.02187.x  +
Volume 37  +
Wikipedia coverage Main topic  +
Wikipedia data extraction Live Wikipedia  +
Wikipedia language Not specified  +
Wikipedia page type Article  + , History  +
Year 2010  +
Creation dateThis property is a special property in this wiki. 15 March 2012 20:29:02  +
Categories Other participation outcomes  + , Commercial aspects  + , Business  + , Publications  +
Modification dateThis property is a special property in this wiki. 30 January 2014 20:29:04  +
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