Social media, financial reporting opacity, and return comovement: Evidence from Seeking Alpha

Rong Ding, Hang Zhou, Yifan Li

Research output: Journal PublicationArticlepeer-review

12 Citations (Scopus)

Abstract

In this study, we develop a model to analyze the interplay between the coverage of a firm on social media, financial reporting opacity, and stock return comovement. Our model predicts a negative association between social media coverage and comovement as social media facilitates the incorporation of firm-specific information into stock price. It also predicts that the effect of social media coverage on comovement is more pronounced among firms with higher financial reporting opacity. Using data from Seeking Alpha, the largest crowdsourced social media platform that provides “third-party generated” financial analysis in US, we find results consistent with the model's predictions.

Original languageEnglish
Article number100511
JournalJournal of Financial Markets
Volume50
DOIs
Publication statusPublished - Sep 2020
Externally publishedYes

Keywords

  • Comovement
  • Financial reporting opacity
  • Seeking Alpha
  • Social media

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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