Spam Works
According to research by Prof. Jonathan Zittrain and Prof. Laura Frieder (Purdue University - Krannert School of Management) "stocks experience a significantly positive return on days when they are heavily touted via spam, and on the day preceding such touting. Volume of trading also responds positively and significantly to heavy touting..."
Zittrain and Frieder published their results recently via SSRN in "Spam Works: Evidence from Stock Touts and Corresponding Market Activity." If you'd like to look at the spam messages and stock price movements that formed the raw data used in the paper, we've set up some data tables here.
Today's Technology Review discusses their research, including what may be possible solutions to the problem:
"Zittrain points out that even gamblers have rules to protect them, and that it may be time for regulators to consider more aggressive -- even paternalistic -- applications of the law to protect those more susceptible to stock spam. One possibility is to introduce steps, or "speed bumps," in the brokerage trading process that would prevent the recipient of a stock tout from immediately acting on it, says Zittrain, adding that such a "cooling off" period might make a person think twice."
Zittrain and Frieder published their results recently via SSRN in "Spam Works: Evidence from Stock Touts and Corresponding Market Activity." If you'd like to look at the spam messages and stock price movements that formed the raw data used in the paper, we've set up some data tables here.
Today's Technology Review discusses their research, including what may be possible solutions to the problem:
"Zittrain points out that even gamblers have rules to protect them, and that it may be time for regulators to consider more aggressive -- even paternalistic -- applications of the law to protect those more susceptible to stock spam. One possibility is to introduce steps, or "speed bumps," in the brokerage trading process that would prevent the recipient of a stock tout from immediately acting on it, says Zittrain, adding that such a "cooling off" period might make a person think twice."