March Market Madness: The Impact of Value-Irrelevant Events on the Market Pricing of Earnings News

54 Pages Posted: 10 Mar 2015

See all articles by Michael S. Drake

Michael S. Drake

Brigham Young University - Marriott School

Kurt H. Gee

Penn State; Financial Accounting Standards Board (FASB)

Jacob R. Thornock

Brigham Young University

Date Written: March 9, 2015


Each year, the NCAA basketball tournament (March Madness) is a daytime distraction for millions of people, providing a largely exogenous shock to investor attention. We investigate whether March Madness influences the market response to earnings by diverting investor attention away from earnings news. We find that the price reaction to earnings news released during March Madness is muted. This result generally holds across several samples and additional analyses. We also find that the result is more muted for low institutional ownership firms, consistent with the effect being driven by less sophisticated investors. Further, we find that it takes the market 30 to 60 days to correct for the distraction effect. Overall, we provide a unique test of the theory of limited attention by documenting that extraneous events can have a significant impact on the pricing of earnings.

Keywords: March Madness, Investor Distraction

Suggested Citation

Drake, Michael S. and Gee, Kurt H. and Thornock, Jacob, March Market Madness: The Impact of Value-Irrelevant Events on the Market Pricing of Earnings News (March 9, 2015). Contemporary Accounting Research, Forthcoming. Available at SSRN:

Michael S. Drake (Contact Author)

Brigham Young University - Marriott School ( email )

United States

Kurt H. Gee

Penn State ( email )

201 Old Main
University Park
State College, PA 16802
United States

Financial Accounting Standards Board (FASB) ( email )

401 Merritt 7
P.O. Box 5116
Norwalk, CT 06856-5116
United States

Jacob Thornock

Brigham Young University ( email )

Provo, UT 84602
United States
8014220828 (Phone)

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