Online Media Causes Biased Stock Investment: Evidence from a Regression-Discontinuity Design

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Jiali Zhou, Ka Chung Ng

Published: 01 Jan 2020, Last Modified: 01 Aug 2025ICIS 2020EveryoneRevisionsBibTeXCC BY-SA 4.0
Abstract: Description This study builds the causal link between the online media and finance market using the context of Chinese stock market. We find that, ranking higher in a typical daily market report causes a stock to have 10% more chance to open higher on the second day than those lower ranked stocks. We further find evidence that this impact of social media reflects a bias rather than a rational expectation, and the effect is stronger when more stocks reach the price limit. However, this effect disappears when investors are given more time to think.