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Market Reaction to iPhone Rumors

Author

Listed:
  • Chong, Terence Tai Leung
  • Wu, Zhang
  • Liu, Yuchen

Abstract

The paper studies the effects of new product rumors about the iPhone on the stock price of the Apple company. We scrape iPhone rumors from Macrumors.com, and obtain a dataset covering 1,264 articles containing 180 words on average bet-ween January 2002 and December 2015. Moreover, we construct a market-decided lexicon to transform qualitative information into quantitative data, and analyze what type of words and what information embedded in the rumors are apt to impact on Apple's stock price. Unlike previous studies, we do not rely on the widely-adopted Harvard-IV-4 dictionary, as the coefficients of the words from the dictionary are neither significant nor consistent with their polarities, compared with our results. The paper obtains three main findings. First, the spread of rumors has a significant impact on the stock price. Second, positive words, rather than negative words, play an important role in affecting the stock price. Third, the stock price is highly sensitive to the words related to the appearance of the iPhone.

Suggested Citation

  • Chong, Terence Tai Leung & Wu, Zhang & Liu, Yuchen, 2019. "Market Reaction to iPhone Rumors," MPRA Paper 92014, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92014
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    References listed on IDEAS

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    Cited by:

    1. Yakup Durmaz & Bülent Demirağ & Sinan Çavuşoğlu, 2023. "The Effect of Negative Past Experiences, Poor Relationship Quality and Rumor on Brand Hate: A Research on Fast Food Industry," Istanbul Business Research, Istanbul University Business School, vol. 52(2), pages 279-300, August.

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    JEL classification:

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

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