The striking increase in the Internet has transformed the way investors receive content in the order of publicly listed companies. One new originality is the growth of commonplace announcement boards or talk flat. Stock phone call boards are autarkical sites on the World Wide Web where individuals discuss publicly listed companies by placard messages that can be read by somebody impermanent the location.

Message boards are on average anonymous forums where individuals are uncommitted to ask questions, tie in correct information, put into words opinions, or even set in train rumors nearly a band. Almost anyone can stake a letter and its tabular array can rapidly spread to thousands of future investors.

Popular well-worn communication floorboard sites consist of Yahoo!, The Motley Fool, Silicon Investor, RagingBull, and Stock Talk. Message-posting leisure on these sites has fully grown from trickle in1997 to thousands of messages all day in new months. Many companies now meticulously display these communication boards and even participate in the consideration to "set the copy straight" or grip in trash ownership.

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In meanness of all this activity, undersized is noted astir stock e-mail boards and their possible impinging on wherewithal markets and collector relatives. To storage place quite a lot of buoyant on this phenomenon, I have undertaken two recent research studies on old-hat messages boards hosted on the touristed Yahoo! website. The early thesis addresses whether message-posting commotion is just unharmed rumbling or is overlapping to camaraderie characteristics and trite marketplace flurry. The second treatise examines the attributes of individuals who position messages and their soon-to-be motives.


My oldest investigating examination examines the determinants of message-posting quantity on tired communication boards ("Cheap Talk on the Web: The Determinants of Postings on Stock Message Boards", University of Michigan Business School Working Paper, November1998).

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In this study, I identify nominee explanations for why respective investors would mail figures on a well-worn e-mail plate. These explanations can be broadly categorised as:

1) nonmeaningful stochastic noise,

2) "herding" doings by unworldly investors,

3)investor inconsistency due to undermanned substance give or take a few a people from tralatitious sources, and

4) hoarder conflict due to uncertainness astir a company's prospects.

I in use a customised Web-crawler (similar to an automatic web watcher) to pull announcement facts involving 1997 and 1998 for over and done with 3,000 open companies traded on Yahoo! unoriginal phone call boards. The unqualified accumulative e-mail reckon for respectively establishment was after competitive beside corporation commercial enterprise reports for the aforesaid juncture spell. An analysis was afterwards performed to establish what group characteristics are linked to message-posting movement.

The results showed a defined stencil in message-posting flurry. The alteration in bill quantity intersectant companies is not merely noise, but is incidental to companies' primal characteristics.

Many of the results are unvarying near the "unsophisticated investor" speculation. Companies beside a puffy figure of investors (i.e. many an half-size retail investors) allure immensely much messages.

It appears that rough investors are track and field on the message-board vogue to pursue "hot stocks" that have in flood prices relative to explanation basics or have fanatical trade and industry running.

On the new hand, the grades likewise variety that quality give or take a few a guests and its hearsay situation be to thrust message-posting distraction. Growing companies with tentative prospects, perilous characteristics, and large levels of gossip asymmetry draw in a greater figure of e-mail postings.

These companies are oft in the application and aid sectors, art on the NASDAQ exchange, have importantly inconstant accounting performance, do not pay dividends, have volatile domestic animals prices, and have trade and industry statements that are frequently challenging to analyse (these are specifically the companies that tempt a substantial analyst later).

In summary, saver characteristics and a company's numbers state of affairs are robust determinants of message-posting leisure.


In "Cheap Talk on the Web", I also analysis the proportion linking trite souk hobby and daily changes in message-posting intensity. I canvas the every day message-posting commotion of 100 companies on Yahoo! letter boards during 1997 and 1998. My investigating indicates that changes in day-after-day message-posting leisure are correlated to every day changes in unoriginal commercialism tome and on a daily basis trite cost chemical property of a joint venture. Message-posting activity as well peaks on years surrounding a company's municipal net income announcements.

Finally, message-posting hobby is shown to be a toughened seer of a company's next-day shopworn commercialism entertainment.. A roomy enlargement in nightlong letter tome is normally followed by high than mediocre next-day commercialism hardback and timeworn asking price changeability. Clearly, in that is a sturdy percentage involving the day-after-day mercantilism achievement in a company's horses and communication plate poster distraction.


In a purely accomplished investigation project, I dig deeper into threadbare message boards and be trained the attributes of individuals who send out messages ("Short Sellers and Message-Posting Activity on the Web", University of Michigan Business School Working Paper, October 4, 1999).

In this study, I analyse postings on Yahoo! e-mail boards for companies programmed in the NASDAQ 100 Index relating 1997 and 1999. A key finding of this survey is that the figure of messages are denote by a littler figure of individuals.

These results are indicative of the pattern on peak band phone call boards. For literally all companies, the number of messages are announce by a reduced amount of than 5% of the individuals who have denote a announcement on the sheet. Based on these results, I classify individuals who send out messages into two groups: moving posters and uninterested posters. Active posters have drastically contrary placard conduct compared to contributory posters. For example, patch most messages are announce on e-mail boards during every day hackneyed swop over commerce hours, alive posters in general assignment messages posthumous at night after commerce work time. Active posters too evidence stout bursts of postgraduate posting diversion followed by lengthy dry spells of low poster amusement. Another remarkable uncovering is that active posters incline to stake in bicycle and sky-high comeback to the messages of other helpful posters. This suggests probable arrangement among moving posters or that a solitary helpful poster is card underneath multiplex aliases. The traditions of stirring posters raise questions something like their motives for participating in debate on ensemble phone call boards.


There have been many claims in the popular with clutch that fugitive sellers are moving participants on hackneyed phone call boards. In my "Short Sellers" study, I examine these claims by analyzing a team of NASDAQ companies that sophisticated enormous changes in investors' short-sale positions over and done with a rotation of months. For each company, I group all calendar month as either a exalted or low short-sale month. The results of my analysis, spell immobile preliminary, represent the successive trends: First, message-posting distraction on a company's phone call lath jumps dramatically during last short-sale months. Second, individuals who are other infrequent communication posters emerge as moving posters during full short-sale months. Finally, location is magnified bicycle card by stirring posters during postgraduate short-sale months. These joint grades offer that little sellers a reactive participants on horses communication boards and mightiness be colluding to promulgate counter hearsay around a establishment.


My investigating has two useful implications for collector folks professionals:1) Keep Your Ear to the Ground. Message-posting human action is not right chance noise, but it associated to a company's message situation. Therefore, you should vista unoriginal communication boards as a measuring device of investors' demands for gen nearly your joint venture. A melodramatic duplication in postings astir your people could be a clue of hoarder discontent and motion the have need of to enough the info gap.2) Know Thy Posters. Message posters are not a homogenised assortment and a few individuals in general dominate the buzz on utmost banal announcement boards. The deeply humour of message boards can permit this slender sect of individuals to disproportionately influence "public opinion" roughly speaking your firm. Therefore, capitalist family professionals should be awake of the likely motives of these letter posters.

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