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Happiness and IPO performance

Author

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  • Dumrongwong, Konpanas
  • Papangkorn, Suwongrat

Abstract

This study investigates the relationship between investor sentiment and stock market performance using a novel approach: the X-based happiness index. Analyzing U.S. firms from 2008 to 2023, we employ both ordinary least squares (OLS) and quantile regression techniques to examine potential nonlinear relationships. While OLS results show a positive association between happiness and returns, our quantile regression analysis reveals a more nuanced relationship: the positive correlation is present across all quantiles but achieves statistical significance exclusively in the upper quantile. This asymmetric effect suggests that happiness exerts its strongest influence during periods of high returns, with tests confirming that the effect in the highest quantile significantly differs from other market conditions. Our findings contribute to behavioral finance literature by demonstrating how social media-derived sentiment measures can capture market dynamics missed by traditional indicators, suggesting investors should pay particular attention to happiness indicators during strong market performance.

Suggested Citation

  • Dumrongwong, Konpanas & Papangkorn, Suwongrat, 2025. "Happiness and IPO performance," Journal of Behavioral and Experimental Finance, Elsevier, vol. 46(C).
    • Handle: RePEc:eee:beexfi:v:46:y:2025:i:c:s2214635025000255
    DOI: 10.1016/j.jbef.2025.101044
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    More about this item

    Keywords

    Initial public offerings; Initial returns; IPO Underpricing; Behavioral Finance; Market Sentiment; Sentiment Indicator;
    All these keywords.

    JEL classification:

    • 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
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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