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Do messages on online stock forums spur firm productivity?

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  • Zhang, Wei
  • Wang, Pengfei
  • Li, Yi

Abstract

This paper explores how messages on online stock forums affect firm productivity. Using the OLS regression, we find that firm productivity is positively associated with stock forum posts. To establish the causality, we use an instrument based on the CSI 500 index membership and examine the effect of stock forum posts on firm productivity among firms with different executive-investor interactions. The results confirm that stock forum posts could make firms more productive. Two mechanisms behind this relationship are identified, i.e., stock forum posts could improve firms' stock price informativeness and corporate governance, and further analysis demonstrates that the magnitude of this relationship varies with posting characteristics. Our findings show a positive consequence of encouraging the development of social media.

Suggested Citation

  • Zhang, Wei & Wang, Pengfei & Li, Yi, 2021. "Do messages on online stock forums spur firm productivity?," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:pacfin:v:68:y:2021:i:c:s0927538x21001165
    DOI: 10.1016/j.pacfin.2021.101609
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    More about this item

    Keywords

    Social media; Firm productivity; Price informativeness; Corporate governance;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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