The impact of online word of mouth on fund sales

Abstract

Popularity of the Internet, the development of Internet technologies and applications in-depth, has increased the spread and the influence by word of mouth. This paper made theoretical research and empirical analysis about the impact of online word of mouth on fund sales. Firstly, based on existing literature, this paper analyzed the different dimensions of online word of mouth. Meanwhile, it proposed theoretical assumptions of impact of online word of mouth on fund sale with the discussion on the main factors on the fund subscription and redemption. Then, a regression model about online word of mouth and open-ended fund sale was established by using cross-sectional data on proportion of fund subscription and redemption, fund net growth rate, net purchase rate, the fund size, and other variables. In this model, lagged variables were introduced. Finally, one could came to the following conclusion: The number of online word of mouth had a significant positive impact on subscription rate and redemption rate. The attention of online word of mouth was positively correlated with subscription, but negatively correlated with the redemption rate. The number of online word of mouth from institutional users had a stronger positive effect on subscription rate.