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3007Although the online operations of the Shenzhen Stock Exchange’s “Hudongyi” platform and the Shanghai Stock Exchange’s “SSE E-Interaction” platform provide more direct and immediate channels for the information communication between listed companies and investors, in the realistic background of the huge internet information and high proportion of retail investors in Chinese capital market, they may increase the unbalance of information diffusion and produce much “noise”. This will reshape the beliefs of investors in the process of valuation together with investors’ limited attention and different ability of information processing, which affects investors’ opinion divergence and in turn drives the changes of stock idiosyncratic risks. Stock idiosyncratic risks matter for asset pricing, corporate investment and financing, the stability of capital market and macro economy significantly. As a result, there is great importance to investigate the impact of online platform interactions on stock idiosyncratic risks theoretically and practically.
By employing a textual analysis method, this paper constructs some proxies to measure the extent of online platform interactions and examines the impact of online platform interactions on the stock idiosyncratic risks of listed companies. The results show that online platform interactions between investors and listed companies will magnify investors’ opinion divergence and in turn increase the stock idiosyncratic risks of listed companies. Furthermore, relaxation of short-selling restriction, increase of corporate information transparency and shareholdings of financial institutional investors will restrain the positive effect of online platform interactions on stock idiosyncratic risks significantly.
This paper contributes to the literature in several aspects: First, different from exploring the single information transferring and searching behavior of investors, it provides richer explanation for the production of stock idiosyncratic risks from the perspective of interactive information disclosure. Second, it demonstrates the evidence about the negative effect of online platform interactions, which provides more comprehensive basis for evaluating the function of online platform and improving this new method of information communication. Third, it provides additional evidence for the question whether online platform interactions between investors and listed companies are informative. In addition, the conclusion also has important practical implications: For investors, it is important to pay attention to the existence and impact of stock idiosyncratic risks during their online platform interactions with listed companies. At the same time, listed companies need to improve the quality of online platform interactions with investors, and decrease the positive drives of online platform interactions on stock idiosyncratic risks. Lastly, it is necessary for regulators to recognize the economic effect of online platform interactions comprehensively, and in turn advance the healthy development of capital market.
