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Does social media information affect individual investor disposition effect? Evidence from Xueqiu

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  • Siliu Chen
  • Fei Ren

Abstract

The irrational behavior of investors selling profitable assets too early while holding onto losing assets for too long is known as the disposition effect. Due to the development of the Internet, the information environment for individual investors has been greatly improved. As an important source of information for individual investors, whether social media can improve investors’ behavioral biases and return to rational expectations is a question worth studying. Based on the post data and actual trading data of the social investment platform Xueqiu.com, this paper studies the impact of social media information on the disposition effect of individual investors. The research results show that social media information can significantly reduce the disposition effect. Furthermore, it is through negative information that social media information reduces the disposition effect. When presented with negative information, individual investors will gradually become more rational in adjusting their positions. At the individual level, factors such as investment experience, users followed, region, and gender can all influence the effectiveness of the information acquired by individual investors in reducing the disposition effect.

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  • Siliu Chen & Fei Ren, 2025. "Does social media information affect individual investor disposition effect? Evidence from Xueqiu," PLOS ONE, Public Library of Science, vol. 20(7), pages 1-21, July.
    • Handle: RePEc:plo:pone00:0328547
    DOI: 10.1371/journal.pone.0328547
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    References listed on IDEAS

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    3. Philip Brown & Nick Chappel & Ray Da Silva Rosa & Terry Walter, 2006. "The Reach of the Disposition Effect: Large Sample Evidence Across Investor Classes," International Review of Finance, International Review of Finance Ltd., vol. 6(1‐2), pages 43-78, March.
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    5. Lei Feng & Mark S. Seasholes, 2005. "Do Investor Sophistication and Trading Experience Eliminate Behavioral Biases in Financial Markets?," Review of Finance, European Finance Association, vol. 9(3), pages 305-351.
    6. Rawley Z. Heimer, 2016. "Peer Pressure: Social Interaction and the Disposition Effect," The Review of Financial Studies, Society for Financial Studies, vol. 29(11), pages 3177-3209.
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