In name only: Information spillovers among Chinese firms with similar stock names during earnings announcements

Jiayue Qiu, Hai Wu and Lijuan Zhang

Journal of Corporate Finance, 2021, vol. 69, issue C

Abstract: We examine whether investors' attention on salient firm characteristics affects information spillovers during corporate earnings announcements. For market participants in China, the stock name is a salient feature of listed companies. We find that the market reaction of non-announcing firms to earnings reports of announcing firms is greater across firms with similar stock names. The incremental information spillovers among similarly named stocks are stronger for larger announcing firms and on days with fewer earnings announcements. The incremental information spillovers between similarly named stocks do not fully reverse in the post-announcement period, consistent with persistent investor behavior predicted by the salience theory. There are also significant return comovements among similarly named stocks. Our findings suggest that investors with limited attention are likely to focus on salient stock names and overestimate the economic connections between similarly name stocks. Our study extends the behavioral finance literature by showing how investors' attention on salient firm features can bias their reaction to unrelated peer disclosures.

Keywords: Salience theory; Stock name similarity; Information spillover; Earnings announcement (search for similar items in EconPapers)
JEL-codes: G14 G41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:69:y:2021:i:c:s092911992100136x

DOI: 10.1016/j.jcorpfin.2021.102015

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