Do messages on online stock forums spur firm productivity

Abstract This paper explores how messages on online stock forums affect firm productivity. Using the OLS regression, we find that firm productivity is positively associated with stock forum posts. To establish the causality, we use an instrument based on the CSI 500 index membership and examine the effect of stock forum posts on firm productivity among firms with different executive-investor interactions. The results confirm that stock forum posts could make firms more productive. Two mechanisms behind this relationship are identified, i.e., stock forum posts could improve firms' stock price informativeness and corporate governance, and further analysis demonstrates that the magnitude of this relationship varies with posting characteristics. Our findings show a positive consequence of encouraging the development of social media.