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"This book shows how online chats impact stock trading and helps practitioners, researchers, and policymakers gauge how online stock recommendations will change investors' trading decisions and sentiments, ultimately impacting firms' values. This book presents theoretical models, mathematical derivations, statistical analyses, case studies, graphic demonstrations, and tabulated empirical evidence to show a new source from which investors obtain information especially for their short-term trading and long-term investment decisions. This book reveals that sentiments disclosed by forum posters are generally over-optimistic. Further empirical evidence shows that online talk not only affects stock returns, but also affects volatility, trading volume, liquidity, and even firm's long-term value and reputation. Such online talk effect is more prominent for small capitalization stocks than large capitalization stocks, more prominent for financial distress firms than financial sound firms. In sum, stock message boards provide useful information for trading. It is doable for large institutional investors to take advantage of such information in an aggregate level to create profitable trading strategies, but this is unlikely for small retail investors"--
