Are Individual Investors Influenced by the Optimism and Credibility of Stock Spam Recommendations?


  • Karen K. Nelson,

  • Richard A. Price,

  • Brian R. Rountree

    Corresponding author
    • Address for correspondence: Brian Rountree, Jones Graduate School of Business, Rice University, 6100 South Main St., Houston, TX 77005. e-mail:

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    • The authors are respectively from Rice University, Utah State University, and Rice University. The authors thank an anonymous referee, Peter Pope (Editor), Cathy Cole, Steve Crawford, Patty Dechow, Gustavo Grullon, Per Olsson, K. Ramesh, Greg Sommers, James Weston, workshop participants at Brigham Young University, Ohio State University, Rice University, Texas Tech University, University of California at Berkeley, University of Texas at San Antonio, Utah State University, the 2008 American Accounting Association Financial Accounting and Reporting Section Midyear Meeting, and the 2008 Lone Star Accounting Research Conference. We also appreciate the research assistance of Sol Jin, Tammy Knots, Ritesh Kumar, Ben Perry, Dan Smith, Luke Stadel and Han Stice. Richard Jones and Leonard Richardson generously provided some of the data for this study. (Paper received October, 2012; revised version accepted October, 2013).


This study examines attention-driven investment decisions using a sample of firms essentially unknown to investors prior to becoming the target of a stock spam campaign. We show that the market reaction to spam varies predictably with the content of the spam message. Spam date returns and volume are significantly higher for stocks targeted by spam emails containing optimistic target price projections bundled with ostensibly credible information quoted from a previously issued company press release. There is also some evidence that disclaimers in spam messages reduce, but do not eliminate, the market response. Attention effects also contribute to spammers’ selection of stocks to target and to spam-related enforcement actions by the Securities and Exchange Commission.