Online investment forum and the market response around earnings announcement in the Chinese stock markets
International Journal of Accounting & Information Management
ISSN: 1834-7649
Article publication date: 7 October 2019
Abstract
Purpose
This paper aims to study the following two questions. Do earnings announcements stimulate investors to participate in online discussions? Does online investment forum participation affect the market’s reaction to earnings news?
Design/methodology/approach
The authors collect all the online posts, which were related to the internet service companies and posted in a Chinese financial forum, guba.eastmoney.com (Guba), during the period between June 30, 2008 and December 31, 2015. Multiple linear regression analysis is used to test the questions.
Findings
The study finds that the earnings announcements induce online discussion. In addition, before the earnings announcement, online posting activity does not affect earnings response coefficient but can weaken the positive association between the magnitude of the upcoming earnings surprise and abnormal trading volume. In contrast, after the earnings announcement, online forum participation can facilitate the incorporation of earnings surprise into the price.
Originality/value
This study contributes to the literature studying the impact of social media on market reaction to earnings news by providing evidence that the price discovery process can be affected by the online investment forum. Several policy implications are also provided.
Keywords
Acknowledgements
The authors thank Maggie Liu (the editor), and the anonymous referees for their helpful comments. This research acknowledges the support by the National Natural Science Foundation of China (Grant NO. 71271174; NO. 71773100; NO. 71862003).
Citation
Hao, Q., Dong, D. and Wu, K. (2019), "Online investment forum and the market response around earnings announcement in the Chinese stock markets", International Journal of Accounting & Information Management, Vol. 27 No. 4, pp. 615-631. https://doi.org/10.1108/IJAIM-11-2018-0128
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited