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The impact of internet articles on investor trading decisions by investor types: Evidence from Korean stock market

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  • Cho, Hyunkwon
  • Choi, Ga-Young
  • Lee, Joonil

Abstract

This study investigates the impact of internet articles, such as blogs or internet community posts, on investors’ trading decisions in response to uncertain news (i.e., rumors). Leveraging the unique disclosure requirement in Korea, which verifies rumors via firm disclosures, we are able to identify trading activities associated with rumors. We find that internet article coverage affects individual investors’ decisions, but not those of institutional investors. Moreover, the post-disclosure returns deteriorate only for individual investors with internet article coverage. Overall, these results suggest that internet articles adversely affect individual investors’ trading decisions on rumors, resulting in a wealth transfer from individual investors to institutional investors.

Suggested Citation

  • Cho, Hyunkwon & Choi, Ga-Young & Lee, Joonil, 2023. "The impact of internet articles on investor trading decisions by investor types: Evidence from Korean stock market," Finance Research Letters, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323004828
    DOI: 10.1016/j.frl.2023.104110
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    References listed on IDEAS

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    More about this item

    Keywords

    Internet articles; Social media; Blog; Information environment; Inquiry disclosure; Mandatory disclosure; Rumor; Investment decision; Institutional investors; Individual investors;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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