Riste Ichev Matej Marinč

Session

Management, Business and Economics

Description

Behavioral finance studies reveal that investors' sentiment affects investment decisions and may therefore affect stock pricing. This paper examines whether the geographic proximity of information disseminated by the 2014 Ebola Outbreak combined with intense media coverage affected asset prices in the United States. The results show that the effect is generally negative on the stock prices, also local media coverage strongly affects local trading, and the effect is more pronounced in small and more volatile stocks and in companies belonging to less stable industries. Furthermore, we find that both retail and institutional investors are more sensitive to the intensity of coverage than to the content of information. Additional tests suggest significant return spillover effects from U.S. markets to other markets one day after the determined event date.

Keywords:

Ebola outbreak, Information dissemination, Geographic proximity, Media coverage, Investors’ sentiment

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-437-49-3

First Page

13

Last Page

21

Location

Durres, Albania

Start Date

28-10-2016 9:00 AM

End Date

30-10-2016 5:00 PM

DOI

10.33107/ubt-ic.2016.19

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Included in

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Oct 28th, 9:00 AM Oct 30th, 5:00 PM

Geographic Proximity of Information to Financial Markets and Impact on Stock Prices: Evidence from the Ebola Outbreak

Durres, Albania

Behavioral finance studies reveal that investors' sentiment affects investment decisions and may therefore affect stock pricing. This paper examines whether the geographic proximity of information disseminated by the 2014 Ebola Outbreak combined with intense media coverage affected asset prices in the United States. The results show that the effect is generally negative on the stock prices, also local media coverage strongly affects local trading, and the effect is more pronounced in small and more volatile stocks and in companies belonging to less stable industries. Furthermore, we find that both retail and institutional investors are more sensitive to the intensity of coverage than to the content of information. Additional tests suggest significant return spillover effects from U.S. markets to other markets one day after the determined event date.