 Dark premonitions: Pre-bankruptcy investor attention and behaviorChristian Lohmann and Steffen Möllenhoff Journal of Banking & Finance, 2023, vol. 151, issue C Abstract: This study examines investor attention and behavior in the periods leading up to bankruptcy. In particular, we analyze whether companies that are effectively bankrupt or peer companies that are financially distressed but remain solvent receive more investor attention. Using extensive data on the activity recorded on the SEC's EDGAR server, we show that companies that are effectively bankrupt receive substantially more attention from investors prior to declaring bankruptcy than peer companies that are financially distressed but remain solvent. This abnormal level of attention can be observed at least 18 months before bankruptcy. Furthermore, we show that professional investors who pay unusual attention to distressed companies that eventually go bankrupt start selling their respective holdings more than 12 months before these companies declare bankruptcy. As a result, the entire study documents the full process of information gathering and processing and subsequent portfolio choices in the case of imminent bankruptcies. Keywords: Bankruptcy; EDGAR log-file data set; Form 13F; Investor attention (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:151:y:2023:i:c:s037842662300078x DOI: 10.1016/j.jbankfin.2023.106853 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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