Title: Wisdom of Which Crowd?— Evidence from an Information-Technology Shock
Speaker: Prof. CHEN Kejing, Dongbei University of Finance and Economics
Time: 14:30 pm, October 17, 2024
Venue: Room 105，Building No.12, Wushan Campus
Introduction to the speaker:
Prof. CHEN Kejing is the Vice Dean of the School of Accounting at Dongbei University of Finance and Economics. His research focuses on capital markets finance and accounting. He has published over 30 papers in domestic and international important academic journals, including Journal of Management Sciences in China, China Economic Quarterly, Journal of World Economy, Accounting Research, Nankai Business Review, Humanities & Social Sciences Communications, Journal of International Financial Management & Accounting, International Review of Economics and Finance, and Research in International Business and Finance.
Abstract：
Who produce information in financial markets? Theory suggests that information is primarily local and therefore locals should play a prominent role, yet the empirical evidence is inconclusive. Rather, preponderant evidence shows how local information is produced by non-locals. We study a government-dictated broadband-internet expansion that reduces information-production costs for both locals and non-locals. Employing unique data on internet-search and stock-trading activities, we find that information production on local stocks increases substantially after the shock, driven by locals rather than non-locals. Negative information is incorporated into stock prices faster than before. Consequently, stocks of local firms exhibit an increase in liquidity and information content, and a decrease in crash risk, all by over 10%.
