Book Chapter2023

The Impact of Word-of-Mouth Communication on Investors’ Decisions and Asset Prices

Handbook of Financial Decision Making

In one sentence

A survey of the empirical literature on the presence and economic consequences of word-of-mouth communication among investors.

Summary

I review recent evidence on word of mouth among retail and institutional investors. On balance, information transmitted through word of mouth does not appear to help investors make better decisions. I discuss possible reasons and avenues for future research.

Research topics

word of mouthinvestor decisionssocial financeliterature review