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Informed Investors and the Internet

Authors

  • Amir Rubin,

    1. The first author is from the Faculty of Business Administration, Simon Fraser University, Burnaby, BC. The second author is from the Management Information System Division, Sauder Business School, University of British Columbia, Vancouver and the Department of Technology Management, Holon Institute of Technology (HIT), Israel. They thank Martin Walker (editor) and an anonymous referee for their valuable comments. The authors gratefully acknowledge the research support of the Social Sciences and Humanities Research Council of Canada. Parts of the paper were written while Amir Rubin was a Visiting Professor at the Leon Recanati School of Business Admin., Tel- Aviv University; and at the Arison School of Business, Interdisciplinary Center (IDC) in Herzliya.
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  • Eran Rubin

    Corresponding author
    1. The first author is from the Faculty of Business Administration, Simon Fraser University, Burnaby, BC. The second author is from the Management Information System Division, Sauder Business School, University of British Columbia, Vancouver and the Department of Technology Management, Holon Institute of Technology (HIT), Israel. They thank Martin Walker (editor) and an anonymous referee for their valuable comments. The authors gratefully acknowledge the research support of the Social Sciences and Humanities Research Council of Canada. Parts of the paper were written while Amir Rubin was a Visiting Professor at the Leon Recanati School of Business Admin., Tel- Aviv University; and at the Arison School of Business, Interdisciplinary Center (IDC) in Herzliya.
    Search for more papers by this author

Address for correspondence: Amir Rubin, Faculty of Business Administration, Simon Fraser University, 8888 University Drive, Burnaby, BC, Canada V5A 1S6.
e-mail: arubin@sfu.ca

Abstract

Abstract:  During the last decade the Internet has become an increasingly important source for gathering company related information. We employ Wikipedia editing frequency as an instrument that captures the degree in which the population is engaged with the processing of company-related information. We find that firms whose information is processed by the population more frequently are associated with lower analysts' forecast errors, smaller analysts' forecast dispersions, and significant changes in bid-ask spreads on analysts' recommendation days. These results indicate that information processing over the Internet is related to the degree to which investors and analysts are informed about companies.

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