Does the Mad Money Show Cause Investors to Go Madly Attentive?

Abstract

We study Mad Money Show’s effects on investor attention and financial markets. Significant effects of Show mentions/recommendations on retail and institutional investor attention differ for buys and sells,  emphasis allocated to a stock,  and remain after controlling for potential moderating events. Induced investor attention subsequently affects abnormal trading volumes and short-sales activities of both investor types, and retail-investor portfolios. Significantly positive (negative) following-day abnormal returns for buy (sell) recommendations become significantly negative (positive) by day 20. Findings are consistent with effects of potential media influencer on limited investor attention, short-term price pressure associated with noise traders, and contrarian investor shorting.

Keywords: Retail and institutional investor attention, Media influencers, Behavioral finance, Trade and return effect