News release and the role of different types of investors

Ma, Junjun; Xiong, Xiong; Xu, Feng

doi:10.1016/j.irfa.2020.101643

Cited by 6 publications

(6 citation statements)

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“…To investigate whether abnormal buying volume by institutional investors contributes to overreactions in focal firms’ returns following a news shock initiated by industry leaders, following Frank and Sanati (2018) and Ma et al (2021), we use the following logistic regression: …”

Section: Explanationmentioning

confidence: 99%

“…In the context of the Chinese stock markets, where short-selling is associated with significant costs, institutional investors with abundant capital are expected to display a higher inclination towards short-selling activities (Ma et al , 2021). Therefore, we anticipate that the effects examined in our analysis will be more pronounced among institutional investor groups.…”

Section: Explanationmentioning

confidence: 99%

“…Institutional investors, with access to professional financial sources like the WIND terminal, gather peer news to guide their trading decisions, making them more likely to consider the influence of peer news. Despite possessing professional trading capabilities and extensive research backgrounds, institutional investors are susceptible to irrational behaviour (An and Zhang, 2013;Ma et al, 2021). They may engage in biased trading on shares rather than closely monitoring them, which can result in overreactions and increased stock price crash risk.…”

Section: Background and Research Questionmentioning

confidence: 99%

“…To examine the buying activities of institutional investors in response to good news from industry leaders, we use analysis as used by Frank and Sanati (2018) and Ma et al (2021) and aim to investigate the relationship between the trading behaviour of institutional investors and the occurrence of positive news from leaders: SUE_focal). In particular, SIZE is the natural logarithm of a firm's market capitalization at the end of the previous fiscal quarter.…”

Section: Attention Bias and Abnormal Trading Activitymentioning

confidence: 99%

“…The final part of this paper investigates the mechanism of underreaction to bad news, with a specific focus on the role of short-selling constraints. In this regard, the study examines whether there are significantly different results for stocks with or without short-selling constraints, which is expected to be more prominent for institutional investor groups due to the costly requirement for short-selling in the Chinese stock market (Ma et al , 2021). The results indicate that underreaction to bad news is mitigated once the stock can be sold short.…”

Section: Introductionmentioning

confidence: 99%

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Peers’ media coverage releases and investor heterogeneity

Duan

Wei

2023

PAR

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Purpose This study aims to examine the behaviour of institutional and retail investors in response to news about industry leaders (peer firms) and to determine its impact on the stock prices of other firms (focal firms) within the same industry. Design/methodology/approach The study investigates the impact of peer news on investor behaviour of Chinese A-shares listed on the Shanghai and Shenzhen Stock Exchanges from 2010 to 2019. The media coverage of industry leaders is sourced from prominent Chinese online financial outlets and the Chinese Financial Press. Support vector machine is applied to identify the positive, neutral and negative news within the articles. The study uses event study and logistic regression to examine the effects of peer news on focal firms’ investor behaviour. Findings The results show that both good and bad news about leaders cause peers’ stock prices to increase initially, but then reverse within one quarter. Further analysis reveals that when leaders’ shares receive positive news coverage, institutional investors tend to exert excessive abnormal buying pressure on peers’ shares, resulting in overreactions. Conversely, retail investors do not actively trade on peers on leaders’ news day due to limited attention. In addition, the study shows that short-selling constraint inhibits bad news from reflecting in the stock prices. Originality/value The study highlights differences in investor behaviour. The finding that institutional investors tend to overreact more to peer firms’ news when focal firms are smaller and have a lower frequency of information disclosure supports the salient theory. This is consistent with the previous framework that suggests overreaction is more pronounced when it is difficult to combine external sources of information to evaluate the focal firms. In contrast, retail investors do not engage in active trading on peers on leaders’ news day due to the limited attention theory.

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Section: Explanationmentioning

confidence: 99%

Section: Explanationmentioning

confidence: 99%

Section: Background and Research Questionmentioning

confidence: 99%

Section: Attention Bias and Abnormal Trading Activitymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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