Stay away from the media during quiet periods?

Does the media help or hurt retail investors during the IPO quiet period?

Brian Bushee (The Wharton School, University of Pennsylvania), Matthew Cedergren (The Wharton School, University of Pennsylvania) and Jeremy Michels (The Wharton School, University of Pennsylvania) study how the media may influence retail trades as well as market returns during the so-called “quiet period”, the first 25 calendar days after a firm’s IPO in the United States. More media coverage during this period is associated with more purchases by retail investors. Retail purchases seem to be attention driven and these retail trades are negatively associated with stock returns at the firm’s first earnings announcement after the IPO. The researchers’ findings suggest that the media coverage may lead to worse investing outcomes for retail investors.

Read full paper “Does the media help or hurt retail investors during the IPO quiet period?” by Brian Bushee, Matthew Cedergren and Jeremy Michels, Journal of Accounting and Economics (Available online 31 August 2019) at ScienceDirect.

CFRA
About CFRA 28 Articles
CFRA aims to provide an effective contribution to scientific research and practice-oriented, pragmatic transfer of knowledge on financial reporting and auditing, as well as financial management more generally. In our Right on the money series, we share easy-to-understand summaries of emerging research in the field. For more information visit CFRA's Website and LinkedIn.

Be the first to comment

Leave a Reply

Your email address will not be published.


*