Stock mispricing, hard-to-value stocks and the influence of internet stock message boards

Information Environment Quantifiers as Investment Analysis Basis

“…Emotions and individual character traits can lead to significant losses and market changes, which brings in the need to develop tools that would be able to forecast the probability of stock quote changes (Sevumyan 2021). Besides, rational restrain artificially induced price movements by following subjective estimations uninfluenced by websites, but the discussion in social media provoking non-professional investors to act in one way or another promotes strong movements of stock quotes, which cannot be corrected by the behavior of rational investors (Xiong et al 2020).…”

“…Studies that divide investor sentiment into positive and negative have concluded that pessimistic investor sentiment affects quotes more than optimistic, and companies with optimistic investor sentiment have significantly higher stock returns in the current month than firms with pessimistic sentiment (Fang et al 2021). In addition, there are also papers confirming that the relationship between publications on investor communication websites and average weekly stock returns mainly refers to periods when investor communication was inactive, and that higher stock returns do not follow investor sentiment (Xiong et al 2020).…”