Does Monetary Incentive Lead to Better Stock Recommendations on Social Media?

Hailiang Chen; Yu Jeffrey Hu; Shan Huang

doi:10.2139/ssrn.2964503

Does Monetary Incentive Lead to Better Stock Recommendations on Social Media?

Hailiang Chen, Yu Jeffrey Hu, Shan Huang

Department of Information Systems

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

Abstract

Social media not only is a new channel to obtain financial market information but also becomes the venue for investors to share and exchange investment ideas. We examine the performance consequences of providing monetary incentive to amateur analysts on social media and its implications for crowd-sourced equity research. We find that monetary incentive is effective in increasing the amount of content outputs but does not lead to better stock recommendations. Additional analysis suggests that monetary incentive results in wider stock coverage, a sign of increased content diversity. This study contributes to the understanding of incentive mechanisms for social media communities in the financial context.

Original language	English
Title of host publication	38th International Conference on Information Systems (ICIS 2017)
Subtitle of host publication	Transforming Society with Digital Innovation
Publisher	Association for Information Systems
Pages	4586-4597
Volume	7
ISBN (Print)	9781510853690, 9780996683159
DOIs	https://doi.org/10.2139/ssrn.2964503
Publication status	Published - 11 Dec 2017
Event	38th International Conference on Information Systems (ICIS 2017): Transforming Society with Digital Innovation - COEX, Convention and Exhibition Center, Seoul, Korea, Republic of Duration: 10 Dec 2017 → 13 Dec 2017 http://icis2017.aisnet.org/ http://icis2017.aisnet.org/wp-content/uploads/2017/12/ICIS2017_ProgramBook_1209.pdf

Publication series

Name	ICIS: Transforming Society with Digital Innovation

Conference

Conference	38th International Conference on Information Systems (ICIS 2017)
Place	Korea, Republic of
City	Seoul
Period	10/12/17 → 13/12/17
Internet address	http://icis2017.aisnet.org/ http://icis2017.aisnet.org/wp-content/uploads/2017/12/ICIS2017_ProgramBook_1209.pdf

Bibliographical note

Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).

Research Keywords

Blog
Investment
Monetary incentive
Stock market
Wisdom of crowds

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10.2139/ssrn.2964503

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Cite this

Chen, H., Hu, Y. J., & Huang, S. (2017). Does Monetary Incentive Lead to Better Stock Recommendations on Social Media? In 38th International Conference on Information Systems (ICIS 2017): Transforming Society with Digital Innovation (Vol. 7, pp. 4586-4597). (ICIS: Transforming Society with Digital Innovation). Association for Information Systems. https://doi.org/10.2139/ssrn.2964503

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title = "Does Monetary Incentive Lead to Better Stock Recommendations on Social Media?",

abstract = "Social media not only is a new channel to obtain financial market information but also becomes the venue for investors to share and exchange investment ideas. We examine the performance consequences of providing monetary incentive to amateur analysts on social media and its implications for crowd-sourced equity research. We find that monetary incentive is effective in increasing the amount of content outputs but does not lead to better stock recommendations. Additional analysis suggests that monetary incentive results in wider stock coverage, a sign of increased content diversity. This study contributes to the understanding of incentive mechanisms for social media communities in the financial context.",

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author = "Hailiang Chen and Hu, {Yu Jeffrey} and Shan Huang",

note = "Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).; 38th International Conference on Information Systems (ICIS 2017) : Transforming Society with Digital Innovation ; Conference date: 10-12-2017 Through 13-12-2017",

year = "2017",

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doi = "10.2139/ssrn.2964503",

language = "English",

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Chen, H, Hu, YJ & Huang, S 2017, Does Monetary Incentive Lead to Better Stock Recommendations on Social Media? in 38th International Conference on Information Systems (ICIS 2017): Transforming Society with Digital Innovation. vol. 7, ICIS: Transforming Society with Digital Innovation, Association for Information Systems, pp. 4586-4597, 38th International Conference on Information Systems (ICIS 2017), Seoul, Korea, Republic of, 10/12/17. https://doi.org/10.2139/ssrn.2964503

Does Monetary Incentive Lead to Better Stock Recommendations on Social Media? / Chen, Hailiang; Hu, Yu Jeffrey; Huang, Shan.
38th International Conference on Information Systems (ICIS 2017): Transforming Society with Digital Innovation. Vol. 7 Association for Information Systems, 2017. p. 4586-4597 (ICIS: Transforming Society with Digital Innovation).

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review