The impact of corona-news on investors’ attention to earnings announcements : an empirical analysis of the Norwegian Stock Marke

Abstract

We use corona-news readership to analyze the short-term effects of investor attention on financial market reactions to earnings announcements in 2020. Our findings show that corona- news does have a distracting effect on other news. As a consequence, we find that investors are less likely to trade when they pay attention to news about corona. On average a one standard deviation increase in corona-news readership reduces the short-term abnormal traded volume by 23% following an earnings announcement. These findings suggest that behavioral effects such as attention does translate to financial market decisions. They are also robust after controlling for other possible explanations. We further investigate if corona-readership has a negative effect on volatility and returns but are not able to establish a significant relationship.