Earnings Announcement Promotions: A Yahoo Finance Field Experiment

43 Pages Posted: 24 Mar 2017 Last revised: 5 Feb 2019

See all articles by Alastair Lawrence

Alastair Lawrence

London Business School

James Ryans

London Business School

Estelle Sun

Boston University - Questrom School of Business

Nikolay Laptev

Yahoo! - Yahoo! Research Labs

Date Written: February 6, 2018

Abstract

This study presents a field experiment we conducted 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, negative earnings news, and on days with fewer promoted 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 response, capital markets field experiment, abnormal returns, retail investors, event study

JEL Classification: M41, G12, G14

Suggested Citation

Lawrence, Alastair and Ryans, James and Sun, Estelle Yuan and Laptev, Nikolay, Earnings Announcement Promotions: A Yahoo Finance Field Experiment (February 6, 2018). Journal of Accounting & Economics (JAE), Vol. 66, No. 2-3, 2018. Available at SSRN: https://ssrn.com/abstract=2940223 or http://dx.doi.org/10.2139/ssrn.2940223

Alastair Lawrence (Contact Author)

London Business School ( email )

Regent's Park
London
United Kingdom

HOME PAGE: http://Www.alastairlawrence.net

James Ryans

London Business School ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom

HOME PAGE: http://www.london.edu

Estelle Yuan Sun

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
1-617-353-2353 (Phone)

Nikolay Laptev

Yahoo! - Yahoo! Research Labs ( email )

Sunnyvale, CA 94089
United States

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