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- W4200216912 abstract "This study examines whether investor attention towards stocks is related to firm centrality in the input-output network. Using a data set of firms’ principal customers, we investigate the effect of firm centrality on the stock return predictability across economically linked firms. We find that stock prices do not promptly incorporate news about principal customers, generating return predictability which diminishes with the customer firm centrality levels. We show that this result is driven by limited investor attention. The evidence reveals that customer firms occupying more central positions in the network receive more investor attention. The results remain strong even when we make use of size-adjusted centrality values, indicating that the centrality effect is not driven by firm size. We find that more central firms are associated with greater financial analyst coverage and greater institutional investor equity holdings. Moreover, our analyses explicate that the source of information has an important role in attracting investor attention. • This study examines whether investor attention towards stocks is related to firm centrality in the input-output network. • Using a data set of firms’ principal customers, we estimate centrality values of firms. • We show that customer firms occupying more central positions in the network receive more investor attention. • We also show that the centrality effect is distinct from firm size effect. • Our analyses reveal that more central firms are associated with greater analyst coverage and more institutional owners." @default.
- W4200216912 created "2021-12-31" @default.
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- W4200216912 date "2021-12-01" @default.
- W4200216912 modified "2023-09-27" @default.
- W4200216912 title "Firm centrality and limited attention" @default.
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- W4200216912 doi "https://doi.org/10.1016/j.iref.2021.12.006" @default.
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