On the Capital Market Consequences of Alternative Data: Evidence from Outer Space

9th Miami Behavioral Finance Conference 2018

67 Pages Posted: 15 Mar 2019 Last revised: 29 May 2019

See all articles by Zsolt Katona

Zsolt Katona

University of California, Berkeley - Haas School of Business

Marcus Painter

Saint Louis University - Department of Finance

Panos N. Patatoukas

University of California, Berkeley - Haas School of Business

Jean Zeng

University of California, Berkeley - Haas School of Business

Date Written: July 30, 2018

Abstract

We study the emergence of satellite imagery of parking lot traffic across major U.S. retailers as a source of alternative data in capital markets. We find that while measures of parking lot traffic from outer space embed timely value-relevant information, such information is not incorporated into stock prices prior to the public disclosure of retailer performance for the quarter. This creates opportunities for sophisticated investors, who can afford to incur the costs of acquiring and processing satellite imagery data, to formulate profitable trading strategies at the expense of individual investors, who tend to be on the other side of the trade. Our evidence suggests that unequal access to alternative data increases information asymmetry among market participants without necessarily facilitating stock price discovery.

Keywords: Alternative Data; Satellite Imagery; Price Discovery; Information Asymmetry

JEL Classification: G12, G14, G23

Suggested Citation

Katona, Zsolt and Painter, Marcus and Patatoukas, Panos N. and Zeng, Jean, On the Capital Market Consequences of Alternative Data: Evidence from Outer Space (July 30, 2018). 9th Miami Behavioral Finance Conference 2018. Available at SSRN: https://ssrn.com/abstract=3222741 or http://dx.doi.org/10.2139/ssrn.3222741

Zsolt Katona

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Marcus Painter

Saint Louis University - Department of Finance ( email )

Saint Louis, MO
United States

Panos N. Patatoukas (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

HOME PAGE: http://sites.google.com/site/panossom/

Jean Zeng

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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