IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v58y2023ipas1544612323006529.html
   My bibliography  Save this article

Consumer attention and company performance: Evidence from luxury companies

Author

Listed:
  • Cheraghali, Hamid
  • Høydal, Hannah
  • Lysebo, Caroline
  • Molnár, Peter

Abstract

Previous research has shown that investor attention, measured by Google searches for company tickers, can predict companies’ returns. However, for companies offering luxury goods in consumer-driven industries, consumer attention might be even more important. Therefore, for each company in the S&P Global Luxury Index we construct a measure of consumer attention based on Google searches for brands related to each company. Our findings suggest that consumer attention predicts the stock returns of these companies to a greater degree than investor attention. The economic significance of these findings is demonstrated by highly profitable trading strategies.

Suggested Citation

  • Cheraghali, Hamid & Høydal, Hannah & Lysebo, Caroline & Molnár, Peter, 2023. "Consumer attention and company performance: Evidence from luxury companies," Finance Research Letters, Elsevier, vol. 58(PA).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323006529
    DOI: 10.1016/j.frl.2023.104280
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323006529
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104280?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Heyman, Dries & Lescrauwaet, Michiel & Stieperaere, Hannes, 2019. "Investor attention and short-term return reversals," Finance Research Letters, Elsevier, vol. 29(C), pages 1-6.
    2. Garman, Mark B & Klass, Michael J, 1980. "On the Estimation of Security Price Volatilities from Historical Data," The Journal of Business, University of Chicago Press, vol. 53(1), pages 67-78, January.
    3. Audrino, Francesco & Sigrist, Fabio & Ballinari, Daniele, 2020. "The impact of sentiment and attention measures on stock market volatility," International Journal of Forecasting, Elsevier, vol. 36(2), pages 334-357.
    4. Kim, Neri & Lučivjanská, Katarína & Molnár, Peter & Villa, Roviel, 2019. "Google searches and stock market activity: Evidence from Norway," Finance Research Letters, Elsevier, vol. 28(C), pages 208-220.
    5. Ekinci, Cumhur & Bulut, Ali Eray, 2021. "Google search and stock returns: A study on BIST 100 stocks," Global Finance Journal, Elsevier, vol. 47(C).
    6. Damien Challet & Ahmed Bel Hadj Ayed, 2013. "Predicting financial markets with Google Trends and not so random keywords," Papers 1307.4643, arXiv.org, revised Mar 2014.
    7. Zhi Da & Joseph Engelberg & Pengjie Gao, 2011. "In Search of Attention," Journal of Finance, American Finance Association, vol. 66(5), pages 1461-1499, October.
    8. Bijl, Laurens & Kringhaug, Glenn & Molnár, Peter & Sandvik, Eirik, 2016. "Google searches and stock returns," International Review of Financial Analysis, Elsevier, vol. 45(C), pages 150-156.
    9. J Anthony Cookson & Joseph E Engelberg & William Mullins & Hui Chen, 0. "Does Partisanship Shape Investor Beliefs? Evidence from the COVID-19 Pandemic," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 10(4), pages 863-893.
    10. Brad M. Barber & Terrance Odean, 2008. "All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors," The Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 785-818, April.
    11. Yang, Xin & Pan, Bing & Evans, James A. & Lv, Benfu, 2015. "Forecasting Chinese tourist volume with search engine data," Tourism Management, Elsevier, vol. 46(C), pages 386-397.
    12. Miller, Edward M, 1977. "Risk, Uncertainty, and Divergence of Opinion," Journal of Finance, American Finance Association, vol. 32(4), pages 1151-1168, September.
    13. Florens Focke & Stefan Ruenzi & Michael Ungeheuer, 2020. "Advertising, Attention, and Financial Markets," The Review of Financial Studies, Society for Financial Studies, vol. 33(10), pages 4676-4720.
    14. Vighneswara Swamy & Munusamy Dharani, 2019. "Investor attention using the Google search volume index – impact on stock returns," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 11(1), pages 56-70, May.
    15. Takeda, Fumiko & Wakao, Takumi, 2014. "Google search intensity and its relationship with returns and trading volume of Japanese stocks," Pacific-Basin Finance Journal, Elsevier, vol. 27(C), pages 1-18.
    16. Banerjee, Prithviraj S. & Doran, James S. & Peterson, David R., 2007. "Implied volatility and future portfolio returns," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 3183-3199, October.
    17. Jun, Seung-Pyo & Yoo, Hyoung Sun & Choi, San, 2018. "Ten years of research change using Google Trends: From the perspective of big data utilizations and applications," Technological Forecasting and Social Change, Elsevier, vol. 130(C), pages 69-87.
    18. J. Anthony Cookson & Marina Niessner, 2020. "Why Don't We Agree? Evidence from a Social Network of Investors," Journal of Finance, American Finance Association, vol. 75(1), pages 173-228, February.
    19. Ding, Rong & Hou, Wenxuan, 2015. "Retail investor attention and stock liquidity," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 37(C), pages 12-26.
    20. Joshua Madsen & Marina Niessner, 2019. "Is Investor Attention for Sale? The Role of Advertising in Financial Markets," Journal of Accounting Research, Wiley Blackwell, vol. 57(3), pages 763-795, June.
    21. Joseph, Kissan & Babajide Wintoki, M. & Zhang, Zelin, 2011. "Forecasting abnormal stock returns and trading volume using investor sentiment: Evidence from online search," International Journal of Forecasting, Elsevier, vol. 27(4), pages 1116-1127, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Desagre, Christophe & D’Hondt, Catherine, 2021. "Googlization and retail trading activity," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    2. Szczygielski, Jan Jakub & Charteris, Ailie & Bwanya, Princess Rutendo & Brzeszczyński, Janusz, 2024. "Google search trends and stock markets: Sentiment, attention or uncertainty?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    3. Chen, Zhongdong & Craig, Karen Ann, 2023. "Active attention, retail investor base, and stock returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    4. Chaiyuth Padungsaksawasdi & Sirimon Treepongkaruna & Robert Brooks, 2019. "Investor Attention and Stock Market Activities: New Evidence from Panel Data," IJFS, MDPI, vol. 7(2), pages 1-19, June.
    5. Christophe Desagre & Catherine D'Hondt, 2020. "Googlization and retail investors' trading activity," LIDAM Discussion Papers LFIN 2020004, Université catholique de Louvain, Louvain Finance (LFIN).
    6. Afees A. Salisu & Ahamuefula E. Ogbonna & Idris Adediran, 2021. "Stock‐induced Google trends and the predictability of sectoral stock returns," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 40(2), pages 327-345, March.
    7. Chen, Zhongdong & Schmidt, Adam & Wang, Jin’ai, 2021. "Retail investor risk-seeking, attention, and the January effect," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    8. Salisu, Afees A. & Vo, Xuan Vinh, 2021. "Firm-specific news and the predictability of Consumer stocks in Vietnam," Finance Research Letters, Elsevier, vol. 41(C).
    9. Tariq Aziz & Valeed Ahmad Ansari, 2021. "How Does Google Search Affect the Stock Market? Evidence from Indian Companies," Vision, , vol. 25(2), pages 224-232, June.
    10. Martina Halouskov'a & Daniel Stav{s}ek & Mat'uv{s} Horv'ath, 2022. "The role of investor attention in global asset price variation during the invasion of Ukraine," Papers 2205.05985, arXiv.org, revised Aug 2022.
    11. Ekinci, Cumhur & Bulut, Ali Eray, 2021. "Google search and stock returns: A study on BIST 100 stocks," Global Finance Journal, Elsevier, vol. 47(C).
    12. Papadamou, Stephanos & Fassas, Athanasios & Kenourgios, Dimitris & Dimitriou, Dimitrios, 2020. "Direct and Indirect Effects of COVID-19 Pandemic on Implied Stock Market Volatility: Evidence from Panel Data Analysis," MPRA Paper 100020, University Library of Munich, Germany.
    13. Kim, Neri & Lučivjanská, Katarína & Molnár, Peter & Villa, Roviel, 2019. "Google searches and stock market activity: Evidence from Norway," Finance Research Letters, Elsevier, vol. 28(C), pages 208-220.
    14. Swamy, Vighneswara & Dharani, M. & Takeda, Fumiko, 2019. "Investor attention and Google Search Volume Index: Evidence from an emerging market using quantile regression analysis," Research in International Business and Finance, Elsevier, vol. 50(C), pages 1-17.
    15. Tihana Škrinjarić, 2019. "Time Varying Spillovers between the Online Search Volume and Stock Returns: Case of CESEE Markets," IJFS, MDPI, vol. 7(4), pages 1-30, October.
    16. Smales, L.A., 2021. "Investor attention and global market returns during the COVID-19 crisis," International Review of Financial Analysis, Elsevier, vol. 73(C).
    17. Cheng, Feiyang & Wang, Chunfeng & Chiao, Chaoshin & Yao, Shouyu & Fang, Zhenming, 2021. "Retail attention, retail trades, and stock price crash risk," Emerging Markets Review, Elsevier, vol. 49(C).
    18. Halousková, Martina & Stašek, Daniel & Horváth, Matúš, 2022. "The role of investor attention in global asset price variation during the invasion of Ukraine," Finance Research Letters, Elsevier, vol. 50(C).
    19. Szymon Lis, 2022. "Investor Sentiment in Asset Pricing Models: A Review," Working Papers 2022-14, Faculty of Economic Sciences, University of Warsaw.
    20. Imene Ben El Hadj Said & Skander Slim, 2022. "The Dynamic Relationship between Investor Attention and Stock Market Volatility: International Evidence," JRFM, MDPI, vol. 15(2), pages 1-25, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323006529. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.