Laws of Attraction

Abstract

The study investigates visibility of the firm, focuses on the role of corporate announcements and develops a combined measure of visibility to classify firms as “celebrity”, “average” and “neglected” and identify factors that affect visibility. Company’s announcements characteristics are shown to be significant predictors of visibility with the effect being more pronounced for sustaining rather than achieving visibility. The status of the firm predicts abnormal return and sales growth of the firm. “Neglected” firms with high corporate announcements activity are more likely to generate high abnormal return than “celebrity” firms with a lower announcement activity. “Celebrity” firms are more likely to show higher increase in sales growth than “neglected” firms. Interestingly, an additional increase in the corporate announcements for “celebrity” firms may not bring further increase in sales growth, but “neglected” firms with high disclosure activity are likely to overcome their low visibility and show sales growth.

Keywords: visibility, attention, corporate disclosure, capital market, financial performance

JEL Classification: M41, G02