Does social media information affect individual investor disposition effect? Evidence from Xueqiu

2026-05-07

AI Summary

This study investigates whether social media information can mitigate the disposition effect—the behavioral bias wherein individual investors prematurely sell winning assets while holding onto losing ones. Leveraging user posts and actual trading records from the Chinese investment platform Xueqiu, the authors employ natural language processing to classify textual sentiment and apply panel data analysis alongside behavioral finance models. This work provides the first empirical evidence in a Chinese social investing context that negative information plays a pivotal role in attenuating the disposition effect. The findings reveal that social media content significantly reduces the disposition effect, with negative sentiment exerting the strongest influence. Moreover, the efficacy of such informational interventions is meaningfully moderated by investor characteristics, including experience, followed accounts, geographic location, and gender.

Abstract

The irrational behavior of investors selling profitable assets too early while holding onto losing assets for too long is known as the disposition effect. Due to the development of the Internet, the information environment for individual investors has been greatly improved. As an important source of information for individual investors, whether social media can improve investors' behavioral biases and return to rational expectations is a question worth studying. Based on the post data and actual trading data of the social investment platform Xueqiu.com, this paper studies the impact of social media information on the disposition effect of individual investors. The research results show that social media information can significantly reduce the disposition effect. Furthermore, it is through negative information that social media information reduces the disposition effect. When presented with negative information, individual investors will gradually become more rational in adjusting their positions. At the individual level, factors such as investment experience, users followed, region, and gender can all influence the effectiveness of the information acquired by individual investors in reducing the disposition effect.

Problem

• disposition effect
• social media
• individual investors
• behavioral bias
• information environment

Innovation

• disposition effect
• social media
• individual investors
• behavioral bias
• negative information