Influential investors in online stock forums

This paper uses data from an online stock forum to examine the behavior of influential investors, posters who are popular among forum members. Unlike prior research, we find that influential investors post messages based on information and target actively traded large firms. Their predictions are more likely to indicate subsequent returns, as compared to other investors. Influential investors exhibit a preference for local investments and, furthermore, their predictions for local firms are more likely to be correct, suggesting a true information advantage. Thus, these investors contribute to the overall functioning of the market by providing insight into targeted companies.