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Abstract:
Technological advances have revolutionized data communication, voice communication and the delivery of information. With the help of the Internet, useful information can be disseminated around the world in a matter of a few seconds. This new method of delivering information has had an enormous effect on business activities in general and on the financial sector and stock investors in particular. These days, the Internet is making stock information of high quality available almost instantly to individual investors everywhere. Armed with such information, these investors can make more informed financial decisions regarding buying and selling stocks. Furthermore, there are lower commissions charged for executing orders through the Internet compared to the traditional broker's commissions. Due to these two factors, a new group of investors has emerged. And, as a direct result of this phenomenon, the volume of trading and the volatility of stock prices are expected to increase substantially. Although there are other issues, such as general economic conditions, market conditions and interest rates, which can contribute to change in the volume and volatility of the market, in this study we investigate the effect of the Internet on the stock market in terms of volume and volatility. Various data analysis methods will be utilized in order to examine the effect of this new phenomenon on the Dow Jones Industrial Average (DJIA), its volatility and its volume.
Introduction
As technology advances and the computer becomes increasingly popular, useful information can be obtained very rapidly. Availability of information can have a profound effect on the decision-making process. Consequently, it is important to examine the effect of new technology and of the instant availability of information on the decision-making process employed by investors in general, and by stock investors in particular.
The Internet has become one of the most powerful vehicles for disseminating information [6]. Along with its related components, such as e-mail and messenger services, the Internet has given people throughout the world immediate access to new financial information. As a direct result of this phenomenon, stock investors have immediate access to an enormous amount of data. These new means of disseminating information have created a tremendous opportunity in the economy in general and in the financial sector in particular. Consequently, over the last 10...