Media Attention and Stock Categorization: An Examination of Stocks Hyped to Benefit from the Olympics

64 Pages Posted: 8 Jul 2021

See all articles by Patricia Dechow

Patricia Dechow

USC Marshall School of Business

Alastair Lawrence

London Business School

Mei Luo

Tsinghua University - School of Economics & Management

Ventsislav Stamenov

University of Southern California

Date Written: July 6, 2021

Abstract

We investigate whether there are temporary valuation impacts on stocks that media outlets list as involved in a major sporting event (the summer Olympics). We examine five summer Olympics and identify stocks that media outlets hype as benefiting from the Olympics (Olympic stocks). We find that Olympic stocks exhibit increases in comovement of returns after the announcement of the winning bid and declines in comovements after the games are played, consistent with the Olympics being used by investors as a category for investment. Furthermore, Olympic stock returns outperform their matched counterparts over this time period. If the comovement and valuation benefits are due to changes in underlying economics then we expect to observe corresponding increases in comovements of fundamentals and improvements in profitability. However, we find no observable changes in fundamental comovements or profitability. Consistent with investor sentiment driving the categorization, we find that Olympic firms with a greater retail investor presence have stronger comovements effects; and trading volume and volatility are abnormally high for Olympic firms on days where media outlets have stories linking the firm to the Olympic games. To clarify event-based categorization occurs in other settings where media outlets classify stocks for investment, we show comovement increases for stocks classified as “Stay-at-Home” by analysts and the media and “Meme” by retail investors on the Reddit social media platform.

Keywords: Sports events, media, Olympics, Olympic stocks, retail investors, valuation, fundamentals, comovement, categorization, investor sentiment, investor recognition, common factor, Stay-at-Home, Meme.

JEL Classification: G12, G14, and M41

Suggested Citation

Dechow, Patricia and Lawrence, Alastair and Luo, Mei and Stamenov, Ventsislav, Media Attention and Stock Categorization: An Examination of Stocks Hyped to Benefit from the Olympics (July 6, 2021). Available at SSRN: https://ssrn.com/abstract=3881333 or http://dx.doi.org/10.2139/ssrn.3881333

Patricia Dechow (Contact Author)

USC Marshall School of Business ( email )

Los Angeles, CA 90089-0441
United States

Alastair Lawrence

London Business School ( email )

Regent's Park
London
United Kingdom

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

Mei Luo

Tsinghua University - School of Economics & Management ( email )

Weilun Building 201B
School of Economics and Management
Beijing, Beijing 100084
China
8610-62773185 (Phone)

Ventsislav Stamenov

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

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