Investors' information sharing and use in virtual communities

Research demonstrates that information disseminated and circulated in online forums may have a significant impact on investors and on the securities market, so an understanding of that environment is critical. This article reports on an analysis of information sharing and use in three investment discussion forums. Threads containing 1,787 posts were coded using previously developed typologies for Internet-based discussion. Citations were studied in their context and sources were categorized into types. A high degree of collaborative information behavior was identified, but the study also reveals some areas of information use that may compromise investors' decision making, including heavy reliance on personal sources of information and other sources that vary greatly in trustworthiness, including commercially sponsored information, blogs, and investor guru sites. These challenges are discussed and recommendations are made for improving services to investors. Questions for additional research are also identified.