Research seminar “UNEXPECTED DISTRACTIONS AND INVESTOR ATTENTION TO CORPORATE ANNOUNCEMENTS” by Doron Israeli
WHEN: Friday, November 17, 12 p.m. – 1 p.m.
WHERE: Block C3 (GSB/GSPP Building), 3rd floor, Room 3038
We investigate whether and to what extent distractions affect investors’ reactions to firm announcements. We use a daily news pressure index as a proxy for the presence of potential investor distraction. Since breaking news captured by this index is largely unpredictable and unrelated to investors’ valuation decisions, our research design offers a unique opportunity to examine investor attention in the absence of strategic timing of announcements by managers. We examine a broad set of corporate announcements to further explore how investor attention varies with announcement type. Using overall trading and Google search volume as measures of investor attention, we find that investors are susceptible to distraction in their reactions to corporate announcements. Our findings also reveal that investor attention varies with announcement type and that retail investors are particularly susceptible to distractions. Keywords: Investor attention; corporate announcements; retail trading; distraction.
Dr. Israeli’s interests and expertise are in empirical capital markets research. Specifically, Dr. Israeli explores the role of financial reporting in capital markets, and investigates the effects of capital markets frictions and human cognitive constraints on stock pricing efficiency and corporate investment policy.
Dr. Israeli has vast experience in the corporate world. He is a CPA (Israel). Prior to starting his PhD studies at Stanford University, he worked in the Corporate Finance Division of Israel Securities Authority (ISA) and in the Professional Practice Department of Ernst & Young (EY), Israel. Dr. Israel’s teaching interests include courses in Econometrics, Accounting, and Finance.