Characteristics and Stock Prices of Firms Flamed on the Internet: The Evidence from Japan

Electronic Commerce Research and Applications. 17: 49-61

32 Pages Posted: 6 Mar 2015 Last revised: 26 Jun 2016

See all articles by Yuta Adachi

Yuta Adachi

University of Tokyo - Department of Technology Management for Innovation

Fumiko Takeda

Keio University

Date Written: March 4, 2016

Abstract

In this study, we investigate the economic impact of flaming on the Internet using Japanese data. In examining the data on firms that experienced flaming between 2006 and September 2013, we establish the following three main findings. First, large firms and ones with negative net income are more likely to be flamed on the Internet. Second, flaming alone may be too weak to impact the stock prices of target firms in the short-term, although it can lower the stock price of target firms at a later period, or when newspapers report the same event. Third, the negative market reaction grows when the flaming content is serious.

Keywords: Flaming; Internet; Event study; Stock prices; Japan

JEL Classification: G14, G15, G38, M31, M37

Suggested Citation

Adachi, Yuta and Takeda, Fumiko, Characteristics and Stock Prices of Firms Flamed on the Internet: The Evidence from Japan (March 4, 2016). Electronic Commerce Research and Applications. 17: 49-61, Available at SSRN: https://ssrn.com/abstract=2574052 or http://dx.doi.org/10.2139/ssrn.2574052

Yuta Adachi

University of Tokyo - Department of Technology Management for Innovation ( email )

Tokyo
Japan

Fumiko Takeda (Contact Author)

Keio University ( email )

Japan

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