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

9th Miami Behavioral Finance Conference 2018

54 Pages Posted: 15 Mar 2019 Last revised: 30 Mar 2021

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 use the introduction of satellite coverage of major retailers to study the capital market implications of unequal access to alternative data. We find that satellite data allowed sophisticated investors to formulate profitable strategies, especially by targeting the quarterly reports of retailers with bad news. Using a difference-in-differences design, we also find that the release of satellite data led to more informed short selling activity, less informed individual trading, and lower stock liquidity around the earnings announcements of retailers with satellite coverage. Overall, our paper provides new evidence that unequal access to alternative data can increase information asymmetry among market participants.

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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