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Do Individual Investors Trade on Investment-Related Internet Postings?

Author

Listed:
  • Manuel Ammann

    (Swiss Institute of Banking and Finance, University of St. Gallen, CH-9000 St. Gallen, Switzerland)

  • Nic Schaub

    (WHU – Otto Beisheim School of Management, D-56179 Vallendar, Germany)

Abstract

Many people share investment ideas online. This study investigates whether individual investors trade on investment-related internet postings. We use unique data from a social trading platform that allow us to observe the shared portfolios of traders, their posted comments, and the replicating transactions of followers. We find robust evidence that followers increasingly replicate shared portfolios of traders after the posting of comments. However, postings do not help followers identify portfolios that deliver superior performance in the future. In a cross-sectional analysis, we show that it is mainly followers typically considered to be unsophisticated who trade after comment postings.

Suggested Citation

  • Manuel Ammann & Nic Schaub, 2021. "Do Individual Investors Trade on Investment-Related Internet Postings?," Management Science, INFORMS, vol. 67(9), pages 5679-5702, September.
    • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:9:p:5679-5702
    DOI: 10.1287/mnsc.2020.3733
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    3. Hirshleifer, David & Lo, Andrew W. & Zhang, Ruixun, 2023. "Social contagion and the survival of diverse investment styles," Journal of Economic Dynamics and Control, Elsevier, vol. 154(C).

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