{"title":"Digital communication and informed trading: Evidence from social distancing orders","authors":"JinGi Ha","doi":"10.1016/j.frl.2025.106786","DOIUrl":null,"url":null,"abstract":"<div><div>This study investigates the relationship between digital communication and the probability of informed trading (PIN). Using social distancing orders in March 2020 as an exogenous shock, this study identifies digital communication among market participants and finds that PIN significantly decreased after the social distancing orders became effective. Robustness tests at the state level and using an international sample further confirm the negative impact of digital communication on PIN. These findings suggest that the ongoing media transition from face-to-face to digital communication can negatively influence informed trading in financial markets.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"74 ","pages":"Article 106786"},"PeriodicalIF":7.4000,"publicationDate":"2025-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Finance Research Letters","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1544612325000510","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
This study investigates the relationship between digital communication and the probability of informed trading (PIN). Using social distancing orders in March 2020 as an exogenous shock, this study identifies digital communication among market participants and finds that PIN significantly decreased after the social distancing orders became effective. Robustness tests at the state level and using an international sample further confirm the negative impact of digital communication on PIN. These findings suggest that the ongoing media transition from face-to-face to digital communication can negatively influence informed trading in financial markets.
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