Investor attention is a limited resource. This chapter discusses the literature on investor limited attention and its effects on capital markets. Theoretical and empirical studies find that when some investors are inattentive, the immediate market reaction to news is incomplete and the price...

We respond to and rebut a number of comments in Daniel Cohen and Thomas Lys’s commentary (2022, this issue) (hereinafter CL) on our paper (Pincus, Wu, and Hwang, 2022, this issue), which re-examines and extends the research in Cohen, Dey, and Lys (2008) (hereinafter CDL). Specifically, we...

Psychological research suggests that communication using dynamic visuals attract higher attention and induce higher activation response than text and static images. Stocktwits is a social media platform where postings about a stock can include GIF images (henceforth GIFs) and declare their...

A widely cited paper, Cohen, Dey, and Lys (2008, hereinafter CDL), examines accrual (AEM) and real earnings management (REM) pre- and post-Sarbanes Oxley and provides evidence that, in the period immediately following SOX, accruals management declined and was substituted by REM. We re-visit CDL...

Using comment streams on Seeking Alpha articles, we examine whether interacting on social media increases or moderates the extremeness of investors’ opinions. Unlike some findings from political science that show social media increases extremeness of opinions, we find that interaction on...

We propose the visual attention hypothesis, that visuals in firm earnings announcements increase attention to the earnings news. We find that visuals in firm Twitter earnings announcements are associated with more retweets, consistent with greater follower engagement with announcements with...