Abstract
We examine the value of due diligence recommendations on Reddit’s Wallstreetbets (WSB) platform. Before the Gamestop (GME) short squeeze, recommendations are significant predictors of returns and cash-flow news. This predictability is eliminated post-GME. Post-GME, the fraction of reports emphasizing price-pressure or attention-grabbing stocks dramatically increases, and the decline in informativeness is concentrated in these reports. Similarly, retail trade informativeness is particularly strong following DD reports in the pre-GME period, but not post-GME. Our findings are consistent with the view that the Gamestop event altered the culture of WSB, leading to a deterioration in investment quality that adversely affected smaller investors.
Original language | English |
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Pages (from-to) | 1409-1459 |
Number of pages | 51 |
Journal | Review of Financial Studies |
Volume | 37 |
Issue number | 5 |
DOIs | |
State | Published - May 2024 |
Bibliographical note
Publisher Copyright:© The Author(s) 2023. Published by Oxford University Press on behalf of The Society for Financial Studies.
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics