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Internet searching and stock price informativeness: Evidence from Google withdrawal in China

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  • Shuxian Li
  • Xinheng Liu

Abstract

We analyze whether and how internet searching impacts stock price informativeness. Using the 2010 Google withdrawal in China as a quasi-natural experiment, we establish a causal effect between internet searching and stock price informativeness using a difference-in-difference framework. We find that firms with higher Google search volume experience a 10% decrease in stock price informativeness after the Google withdrawal. The negative effect of the Google withdrawal on stock price informativeness is pronounced in firms with more retail investors, larger state-ownership, and poor analysts’ earnings forecasts. Our results suggest that retail investors can benefit from internet searching to collect and process firm-specific information more efficiently.

Suggested Citation

  • Shuxian Li & Xinheng Liu, 2024. "Internet searching and stock price informativeness: Evidence from Google withdrawal in China," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-18, March.
    • Handle: RePEc:plo:pone00:0297160
    DOI: 10.1371/journal.pone.0297160
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