Personal experience as social capital in online investor forums

• Information disseminated in online forums has a significant impact on investors.
• Social capital theory is used to understand how information exchange is facilitated.
• Personal experience functions as a form of social capital in online environments.
• Posters who make personal experience statements enjoy higher response rates.
• More information is shared with posters who make personal experience statements.

Research demonstrates that information disseminated and circulated in online forums may have a significant impact on investors and on the securities market. Therefore, an understanding of that environment is critical. This research uses social capital theory as a framework for understanding how information exchange is facilitated in online investor forums. Specifically, it explores whether or not personal experience may generate social capital in the online environment. This work reports on the relationships between sharing personal experience and information sharing and use in three investor discussion forums. Four hundred forty threads containing 2405 posts were analyzed for this study. Thread starter posts and responses were quantified and coded for statements of personal experience. Citations to information sources were also measured. Results demonstrate that explicitly stating personal experience or lack of personal experience affects the quantity and quality of ensuing discussion and information exchange. Possible implications of this work on both the study of online investor forums and the study of social capital are discussed.