Does the Media Help or Hurt Retail Investors During the IPO Quiet Period?
57 Pages Posted: 29 Apr 2018 Last revised: 27 Aug 2019
Date Written: August 26, 2019
We examine how the media influences retail trade and market returns during the “quiet period” that follows a firm’s IPO. We find that more media coverage during this period is associated with more purchases by retail investors and that such purchases are attention-driven, rather than information-based. Further, these retail trades are negatively associated with stock returns at the firm’s first earnings announcement post-IPO. Our results suggest that media coverage, combined with market frictions that limit price efficiency in the post-IPO period, leads to worse investing outcomes for retail investors.
Keywords: Media, Retail Investors, Retail Trade, Initial Public Offering, IPO, Quiet Period, Individual Investors, Investor Attention
JEL Classification: G11, G14, G24, M48
Suggested Citation: Suggested Citation