Earnings announcement promotions: a Yahoo Finance field experiment
Subject
Accounting
Publishing details
Social Sciences Research Network
Authors / Editors
Lawrence A; Ryans J P; Sun E; Laptev N
Biographies
Publication Year
2017
Abstract
This study presents a natural field experiment in which media articles for a random sample of firms with earnings announcements are promoted to a one percent subset of Yahoo Finance users. The promoted firms have similar fundamental and earnings-news characteristics as control firms, yet we find that promoted firms have higher abnormal returns on the day of the earnings announcement, and some evidence of lower bid-ask spreads. Moreover, these results are more pronounced for less visible firms. We do not find evidence of significant increases in trading volume, or of information acquisition by users subject to the promotion. These findings suggest that investor attention affects the pricing of earnings and that retail investors buy stocks that catch their attention, in a setting where attention is randomly assigned.
Keywords
Investor attention; Media articles; Earnings responses; Capital markets field experiment; Abnormal returns; Retail investors
Series Number
2940223
Series
Social Sciences Research Network