Download This PaperNews Dissemination and Investor Attention
52 Pages Posted: 28 Mar 2014 Last revised: 15 Mar 2016
Date Written: March 9, 2016
Abstract
We examine how investor attention changes when a firm adopts a modern news dissemination technology. We find that after continental European firms begin using an English-language electronic wire service to disseminate company news, they exhibit a stronger initial reaction to earnings surprises, a lower post earnings announcement stock price drift, and an increase in abnormal trading volume near earnings announcements, compared to when they disseminated their news in non-electronic format and in a continental European language. Our results hold for a sub-sample of firms for which the decision to use a wire service was likely exogenous. The effect of wire services on investor attention is due to the format of news (electronic and English-language), not to the increased speed of news transmission.
Keywords: News dissemination; Language; Media coverage; Earnings announcements; Limited attention; High-Frequency Trading
JEL Classification: D83, G12, G14
Suggested Citation: Suggested Citation
Swiss Finance Institute
c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland
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