The Impact of Business and Economics News on Investor Attention

Andrei, Daniel; Friedman, Henry L.; Ozel, N. Bugra

doi:10.2139/ssrn.3128673

Cited by 12 publications

(27 citation statements)

References 53 publications

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“…This research finds that investor attention affects asset prices (Huberman and Regev, 2001; Da et al ., 2011), trading volume (Barber and Odean, 2008; Madsen and Niessner, 2019), risk premiums (Andrei and Hasler, 2015; Boguth et al ., 2019; Fisher et al ., 2021) and returns around earnings announcements (Drake et al ., 2012; Chapman, 2018). Recent studies further show that attention influence stock price reaction to macroeconomic (Benamar et al ., 2021) and firm-level news (Andrei et al ., 2021).…”

Section: Prior Literature and Hypothesesmentioning

confidence: 99%

Do analysts cater to investor information demand?

Jansen

Hossain

Taylor

2022

IJMF

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Purpose The purpose of the study is to examine whether analyst coverage responds to changes in investor information demand for a firm and to test whether certain investor or firm characteristics moderate this association. Design/methodology/approach The authors model analyst activeness (AA) as a function of institutional investors' information demand, proxied by news readership on Bloomberg terminals and retail investors' information demand, proxied by the Google Search Volume Index (GSVI). Additionally, the authors take several steps to mitigate concerns about reverse causality that may confound the findings. Findings Results suggest that analysts respond to information demand shocks, but partially revert their coverage after the demand shock subsides. Furthermore, the results suggest that analysts cater their coverage more towards institutional investors than to retail investors. Evidence also suggests that analysts are more responsive to investors interested in firms with tech stock characteristics. Finally, the authors find evidence that specialist analysts respond more to institutional investors while generalist analysts respond more to retail investors. Originality/value The authors are the first to empirically examine the extent to which analysts cater to investor information demand. This is a vital topic to study because analysts are one of the primary sources of information for market participants. Understanding an analyst's motivation for providing information will help to facilitate market efficiency.

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Section: Prior Literature and Hypothesesmentioning

confidence: 99%

Do analysts cater to investor information demand?

Jansen

Hossain

Taylor

2022

IJMF

View full text Add to dashboard Cite

show abstract

“…We first examine whether the market rewards the act of beating earnings targets when macro uncertainty is high. On the one hand, recent research (e.g., Andrei et al 2021) shows that investors' attention to firm-specific earning news increases with the amount of economic uncertainty. On the other hand, because earnings are predictive of future economic output (Konchitchki and Papatoukas 2014), if the economy is unforecastable, then earnings might not be an important determinant of the premium for beating earnings expectations (i.e., macro noise crowds out fundamentals).…”

Section: Hypothesesmentioning

confidence: 99%

“…Given costly information acquisition (Grossman and Stiglitz 1980), Andrei, Friedman, and Ozel (2021) analytically show that investors' attention to firm-specific earnings announcements increases with the amount of economic uncertainty, thereby crowding out macro noise. On the other hand, given that earnings are predictive of future economic activity, if the economy is in a highly uncertain state, then earnings might not matter for valuation.…”

Section: Introductionmentioning

confidence: 99%

“…3 1998), Koh, Matsumoto, and Rajgopal (2008) report a lower frequency of earnings management to beat analyst earnings forecasts in the post-Sarbanes Oxley (SOX) period. Because investor attention to firm-specific news is likely elevated during high macro uncertainty periods (Andrei et al 2021), our third research question predicts a lower frequency of earnings management to beat analyst earnings forecasts during high macro uncertainty periods compared to low macro uncertainty periods.…”

Section: Introductionmentioning

confidence: 99%

“…Our next two hypotheses focus on the relation between the incremental premium and accounting information quality. Because greater investor attention restricts earnings management opportunities (Teoh et al 1998;Koh et al 2008), and because investor attention to firm-specific earnings news is likely to be elevated during high macro uncertainty periods (Andrei et al 2021), fewer firms likely have an opportunity to use earnings management to beat analyst earnings forecasts during high macro uncertainty periods compared to low macro uncertainty periods. This leads to our third hypothesis:…”

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confidence: 99%

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