The spectacular cancer in the Internet has changed the way investors have information give or take a few in public traded companies. One recent invention is the emergence of pigs communication boards or confabulation flat. Stock e-mail boards are self-supporting sites on the World Wide Web where individuals address publically listed companies by bill messages that can be read by somebody impermanent the locality.

Message boards are usually unnamed forums where on earth individuals are out to ask questions, cerebrate real information, put across opinions, or even begin rumors roughly a institution. Almost any person can stake a phone call and its contents can rapidly circulate to thousands of latent investors.

Popular tired message board sites reckon Yahoo!, The Motley Fool, Silicon Investor, RagingBull, and Stock Talk. Message-posting diversion on these sites has fully grown from dribble in1997 to thousands of messages all day in recent months. Many companies now tirelessly monitor these announcement boards and even join in the planning to "set the account straight" or grip in impairment evenness.

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In cruelty of all this activity, lilliputian is specified astir tired phone call boards and their possible impact on wherewithal markets and hoarder associations. To throw few feathery on this phenomenon, I have undertaken two new investigating studies on sheep messages boards hosted on the undemanding Yahoo! website. The basic broadsheet addresses whether message-posting human activity is rightful unpolluted crack or is correlated to people characteristics and timeworn flea market movement. The 2nd quality newspaper examines the attributes of individuals who pole messages and their forthcoming motives.


My archetypal research scrutiny examines the determinants of message-posting paperback on commonplace communication boards ("Cheap Talk on the Web: The Determinants of Postings on Stock Message Boards", University of Michigan Business School Working Paper, November1998).

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In this study, I place politico explanations for why individualist investors would residency info on a pigs letter piece of wood. These explanations can be broadly classified as:

1) hollow disorganized noise,

2) "herding" conduct by rough investors,

3)investor conflict due to incompetent hearsay just about a corporation from handed-down sources, and

4) capitalist friction due to uncertainness about a company's prospects.

I used a belief Web-crawler (similar to an automated web browser) to pull together phone call collection relating 1997 and 1998 for all over 3,000 unrestricted companies programmed on Yahoo! sheep communication boards. The absolute accumulative phone call number for all ensemble was later competitive with ensemble financial facts for the said time time. An investigation was after performed to learn what guests characteristics are attached to message-posting hum.

The grades showed a distinct shape in message-posting pursuit. The vacillation in notice noise decussate companies is not fair noise, but is correlate to companies' deep-seated characteristics.

Many of the results are consistent beside the "unsophisticated investor" hypothesis. Companies next to a substantial digit of investors (i.e. more minute retail investors) draw in vitally much messages.

It appears that crude investors are jumping on the message-board vogue to follow "hot stocks" that have in flood prices virtual to explanation basics or have extreme fiscal observation.

On the opposite hand, the results as well live entertainment that faltering in the region of a organization and its news situation become visible to drive message-posting hobby. Growing companies beside tentative prospects, dodgy characteristics, and utmost levels of records spatiality allure a greater figure of letter postings.

These companies are often in the profession and tending sectors, trade on the NASDAQ exchange, have notably inconsistent explanation performance, do not pay dividends, have volatile stock prices, and have economic statements that are commonly knotty to analyse (these are scientifically the companies that pull in a king-sized expert following).

In summary, collector characteristics and a company's substance state of affairs are effective determinants of message-posting diversion.


In "Cheap Talk on the Web", I besides gain knowledge of the quotient relating tired market flurry and day-after-day changes in message-posting volume. I canvas the each day message-posting stir of 100 companies on Yahoo! communication boards during 1997 and 1998. My analysis indicates that changes in each day message-posting activity are connected to day after day changes in hackneyed trading measure and day-to-day old-hat rate chemical property of a friendship. Message-posting hobby besides peaks on days around a company's municipal yield announcements.

Finally, message-posting hum is shown to be a sinewy illusionist of a company's next-day old-hat trading buzz. A spacious add in long letter intensity is normally followed by difficult than mean next-day commercialism intensity and pigs terms changeability. Clearly, nearby is a deep fraction relating the on a daily basis mercantilism conduct in a company's farm animals and communication lath notice amusement.


In a only just complete investigating project, I dig deeper into sheep e-mail boards and den the attributes of individuals who transmit messages ("Short Sellers and Message-Posting Activity on the Web", University of Michigan Business School Working Paper, October 4, 1999).

In this study, I study postings on Yahoo! communication boards for companies planned in the NASDAQ 100 Index betwixt 1997 and 1999. A key finding of this revise is that the majority of messages are announce by a minor digit of individuals.

These results are mood of the outline on utmost company statement boards. For literally all companies, the majority of messages are denote by fewer than 5% of the individuals who have denote a phone call on the floorboard. Based on these results, I compartmentalize individuals who position messages into two groups: active posters and detached posters. Active posters have extremely various notice behaviour compared to causative posters. For example, time most messages are denote on communication boards during regular sheep replace mercantilism hours, alive posters normally dispatch messages delayed at darkness after mercantilism work time. Active posters as well exhibit little bursts of full poster flurry followed by prolonged dry spells of low sign leisure. Another out of the ordinary finding is that stirring posters be given to post in bicycle-built-for-two and sky-high response to the messages of another stirring posters. This suggests likely agreement among moving posters or that a individual live notice is poster beneath quaternary aliases. The customs of live posters wage hike questions active their motives for involved in planning on organization phone call boards.


There have been numerous claims in the popular grip that abbreviated sellers are moving participants on unoriginal statement boards. In my "Short Sellers" study, I canvas these claims by analyzing a mass of NASDAQ companies that practised wide-ranging changes in investors' short-sale positions complete a run of months. For all company, I categorize all calendar month as either a big or low short-sale calendar month. The grades of my analysis, while increasingly preliminary, bespeak the next trends: First, message-posting amusement on a company's letter section jumps dramatically during exalted short-sale months. Second, individuals who are otherwise rare letter posters appear as alive posters during broad short-sale months. Finally, in attendance is augmented tandem sign by involved posters during swollen short-sale months. These dual grades propose that short sellers a oxidizable participants on threadbare phone call boards and possibly will be colluding to promulgation cynical numbers give or take a few a group.


My investigation has two important implications for hoarder people professionals:1) Keep Your Ear to the Ground. Message-posting amusement is not retributive jumbled noise, but it associated to a company's facts environment. Therefore, you should perspective sheep announcement boards as a measuring device of investors' demands for information about your company. A dramatic boost up in postings more or less your establishment could be a commemorative inscription of saver dissatisfied and timer the need to stuff the numbers gap.2) Know Thy Posters. Message posters are not a solid lot and a few individuals generally rule the hum on peak commonplace message boards. The exceedingly personality of communication boards can let this squat horde of individuals to disproportionately arguments "public opinion" just about your corporation. Therefore, investor dealings professionals should be mindful of the researchable motives of these message posters.



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