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Thesis defences

PhD Oral Exam - Ali Rouhghalandari, Finance

Effect of Sentiment, Media Mentions and Covid-19 Closures on Investor Behavior

Date & time
Friday, March 8, 2024
10:30 a.m. – 1:30 p.m.

This event is free


School of Graduate Studies


Nadeem Butt


John Molson Building
1450 Guy
Room 11.316

Wheel chair accessible


When studying for a doctoral degree (PhD), candidates submit a thesis that provides a critical review of the current state of knowledge of the thesis subject as well as the student’s own contributions to the subject. The distinguishing criterion of doctoral graduate research is a significant and original contribution to knowledge.

Once accepted, the candidate presents the thesis orally. This oral exam is open to the public.


The thesis consists of three essays on the effect of sentiment indexes on the transactional behaviors of insiders, the effect of a TV show called Mad Money and its host as an influencer on the stock market, and the effect of school/daycare closures during Covid-19 on the stock market.

In the first essay, sentiment indexes extracted from various media (un)purged of overnight returns and overnight returns are used as firm-specific sentiment proxies. Insiders are found to be more likely to trade against firm-specific sentiment. These contrarian trading strategies of insiders differ for some firm attributes (e.g., R&D intensity and number of following analysts), and litigation-risk differences between three windows near earnings announcements. Abnormal-return and dollar paper profits over horizons of six and 12 months for not-round-trip insider transactions are consistently positive and significant. In contrast, abnormal-return (dollar) actual profits are significantly positive (negative) over these two horizons. As expected, statistically and economically insignificant associations of the sentiment proxies are found with both paper and actual dollar profits of round-trip transactions. The findings are cautiously interpreted as being consistent with the litigation-risk management of insiders by timing their trades contrarian to firm-specific sentiment and by not realizing paper profits over horizons of up to one year.

In the second essay, the effect of Media on the financial market is examined by focusing on the popular TV show called Mad Money. Firm mentions/recommendations on the popular Mad Money Show are found to significantly affect institutional and retail investor active attention, proxied by SEC EDGAR queries and posts on StockTwits. The effects depend on recommendation directions (buy or sell) and a stock’s exposure on the Show. Effects remain after controlling for other firm-specific news and moderating events (e.g., Superbowl and Olympics). The induced investor active attention subsequently affects abnormal trading volumes and short sales activities of institutional/retail investors, and retail investor portfolios. No abnormal returns are associated with any pre-Show publicity about upcoming guest interviews. Significantly positive (negative) following-day abnormal returns for buy (sell) recommendations become significantly negative (positive) by day 20. Overall, the findings are consistent with the impact of the media and its potential influencers on the limited active attention budgets of investors, the short-term price pressure associated with noise traders, and the shorting of contrarian investors.

In the third essay, the impact of daycare and school closures during the Covid-19 pandemic on trading activities of OTC investors is examined. Using mobility statistics and weekly closure data at the county level, a significant negative association is found between school/daycare closures and the trading activities of local firms. The effect is more pronounced for simultaneous daycare/school closures, and for smaller firms, those with lower institutional ownership, less investor recognition, and limited geographic dispersion in business activities. The adverse effect of such closures on the trading activities of OTC stocks is consistent with pandemic-induced attention diversion of local (retail) investors with children.

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