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Do investors prefer multiple small bad news events or a single big one? Evidence from the Chinese stock market

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  • Jiang, Ping
  • Wang, Xinyi
  • Yuan, Bozong
  • Zhao, Lu

Abstract

This paper focuses on the relation between the hedonic editing hypothesis and the stock market. Based on the data of China's stock market from 2014 to 2020 and the utilization of an exogenous shock arising from the “New Regulation of Insider Selling”, we find that investors will respond more pessimistically to the negative information that is on the same event but released multiple times. This result provides new evidence for the hedonic editing hypothesis to be tenable in the capital market.

Suggested Citation

  • Jiang, Ping & Wang, Xinyi & Yuan, Bozong & Zhao, Lu, 2024. "Do investors prefer multiple small bad news events or a single big one? Evidence from the Chinese stock market," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001338
    DOI: 10.1016/j.frl.2024.105103
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    References listed on IDEAS

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    More about this item

    Keywords

    Hedonic editing hypothesis; Prospect theory; New regulation of insider selling; insider trading;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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