Can Local Posts Predict Firm-Level Earnings and Stock Returns?

Xuejun Jin, Zhenzi Tian and Xin Hong

Emerging Markets Finance and Trade, 2025, vol. 61, issue 12, 3658-3673

Abstract: This paper examines the predictive power of local versus non-local investors’ opinions on Chinese stock message boards. We find that local investors can predict earnings surprises and stock returns, particularly in firms with weak information environments, while non-local investors cannot. The advantage of local investors is stronger in densely populated provinces, firms with more employees, or those in manufacturing. These findings suggest that local investors gain information through interactions with employees and observations of firms, with word-of-mouth as a key channel for further disseminating this information. Additionally, local investors with higher pre-announcement local fan proportions demonstrate stronger predictive power, reflecting their ability to discern local information, a skill non-locals lack. This explains why local information remains valuable even when shared online.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2025.2487573 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:61:y:2025:i:12:p:3658-3673

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2025.2487573

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().