Investors’ Attention Allocation to Stock Analysis: The Role of Rating Deviation

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2022-01-04

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Stock analysis is important for investors. However, little is known about how investors allocate their attention to different analyses. In the last two decades, online investment communities (OICs) have proliferated. In this study, we use investors’ online activities (i.e., comment and like) and amateur stock analysis in Seeking Alpha to explore how investors allocate their attention among different analyses by examining the effects of stock rating deviation on their attention. We measure the stock rating deviation of one analysis by comparing its stock rating with the previous rating for the same stock. The results show that the analyses with stock ratings that are more deviated from the existing ratings tend to receive more comments and likes from investors, indicating that rating deviation from the consensus positively impacts investor attention to stock analysis. In addition, the deviation’s negativity and the stock volatility strengthen the impact of rating deviation on investor attention. However, analysts’ busyness status negatively moderates this impact.

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Crowd-based Platforms, amateur analyst, investor attention, rating deviation, stock analysis

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10 pages

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Proceedings of the 55th Hawaii International Conference on System Sciences

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Attribution-NonCommercial-NoDerivatives 4.0 International

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