We examine the role of internet speed in sophistication among individual investors.
This paper utilizes archival data and regression-based analyses in examining the research question.
We first show that higher individual investor internet speed (IIIS) is associated with geographic measures of education, job type and income of users accessing EDGAR filings. We then show that higher IIIS is positively related to the market reaction to newly released 10-K, 10-Q and 8-K filings and that the relation is stronger for companies and filings where greater sophistication is needed. Higher IIIS is also associated with a lower price drift after the release of a 10-K, 10-Q and 8-K filing on EDGAR.
Overall, our findings suggest that greater internet access speeds can aid in the sophistication and price discovery process for individual investors.
