The Medium is the Message Professor Peter Wysocki, University of Michigan Business School Stock message boards and chat rooms have caught the attention of the financial press, regulators and investor relations professionals. While much of this attention has focused on anecdotes about particular companies, the real story is the medium itself.
Message boards represent a revolution in the way information can spread to investors.
My research at the University of Michigan on the message board revolution has several important implications for investor relations professionals. A key concern about stock message boards is the underlying motives of individuals who post messages about a company. One possibility is that the investor has taken a short position in a company and hopes to profit from spreading negative information about that company. My research provides evidence consistent with this claim. In fact, message posting volume is strongly related to investors' short-sale positions in a company's stock.