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Institutional/retail investor active attention and behavior: Firm coverage on Mad Money

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  • Kryzanowski, Lawrence
  • Rouhghalandari, Ali

Abstract

We find that firm coverage on the popular Mad Money Show is significantly associated with institutional and retail investor active attention, proxied by SEC EDGAR queries and posts on StockTwits. The association strengths differ by recommendation directions (buy or sell) and a firm’s exposure on the Show. The associations remain after controlling for selection bias, other firm-specific news, and moderating events (e.g., Superbowl and Olympics). The increased investor active attention is associated subsequently with abnormal trading volumes and short-sales activities of institutional/retail investors, and retail investor portfolios. While the opening price captures most of the significant association between Show coverage and next day’s returns, the extent of subsequent reversals varies by Show segment, recommendation direction and moderators (e.g., firm-coverage frequency on the same Show). No abnormal returns are associated with any pre-Show publicity about upcoming guest interviews. Our findings are consistent with the association of the media and its potential influencers with the limited active attention budgets of investors, different behaviors of retail and institutional investors, and the shorting of contrarian investors.

Suggested Citation

  • Kryzanowski, Lawrence & Rouhghalandari, Ali, 2024. "Institutional/retail investor active attention and behavior: Firm coverage on Mad Money," Journal of Behavioral and Experimental Finance, Elsevier, vol. 42(C).
    • Handle: RePEc:eee:beexfi:v:42:y:2024:i:c:s2214635024000522
    DOI: 10.1016/j.jbef.2024.100937
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    More about this item

    Keywords

    Institutional/retail investor active attention; Media influencers; Behavioral finance; Trade/holdings/return associations;
    All these keywords.

    JEL classification:

    • G4 - Financial Economics - - Behavioral Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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