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Coverage news and companies’ stock abnormal returns

Author

Listed:
  • Carlos Francisco Alves

    () (Faculdade de Economia da Universidade do Porto)

  • Ana Luísa Nogueira Parada Ferreira e Silva

    () (Faculdade de Economia da Universidade do Porto)

Abstract

This article investigates the news coverage of the PSI20 index’s companies, when they registered extreme abnormal returns during a nine years’ period. It looks for evidence on whether listed companies manage information before or after the occurrence of extreme returns. We found divergences between the news coverage performed in situations of abnormal positive returns and in opposite situations, which seem to result from actions promoted by these companies deliberately. In particular, calls to the first page of the newspapers are more prevalent for positive events, which indicates that companies, in advance, promote information by communicating it to the media. In addition, before the event, companies are proportionally more cited as a source of the news for positive events. This indicates that companies seek to capitalize the positive impact of the favourable situation they subsequently disclose to the market. In the period after the occurrence of extreme abnormal returns, companies are more often a source of the news for negative events, seeking to mitigate the impact of the relevant fact. Concerning the provision of interviews and the publication of advertisements, there’s no evidence that the company’s behaviour is distinct depending on the sign of the verified abnormal return.

Suggested Citation

  • Carlos Francisco Alves & Ana Luísa Nogueira Parada Ferreira e Silva, 2018. "Coverage news and companies’ stock abnormal returns," FEP Working Papers 608, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:608
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    References listed on IDEAS

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    Keywords

    Extreme Abnormal Return; News Coverage; Information Management.;

    JEL classification:

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

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