Do internet stock message boards influence firm value? evidence from China

This study examines whether Internet stock message boards influence firm value in China. By analyzing data on online posts manually collected from a Chinese stock message board over the period from 2007 to 2018, we find that more online posts lead to greater firm value. Besides, the impact of stock message boards on firm value is more pronounced for firms with higher idiosyncratic risk. We further examine the mechanisms underlying the positive association between online posts and firm value. We find that more online posts contribute to a larger shareholder base and more retail investors' trading, which potentially increases the degree of investor recognition and therefore enhances firm value. The results are robust to instrumental variable approaches and alternative model specifications. Overall, this study provides a new understanding of the effect of social media on financial market.