Investor sentiment and stock returns: Wenchuan Earthquake

Shan, Liwei; Gong, Stephen

doi:10.1016/j.frl.2011.07.002

Cited by 58 publications

(22 citation statements)

References 20 publications

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“…As local markets are materially and symbolically central to domestic firms' operations (Rugman, 2005), the shift in economic sentiment wrought by a disaster and the resulting uncertainty induces in domestic firms a calculus of consequences (Henisz, Dorobantu, & Nartey, 2014). These firms must contend with greater ambiguity and as a result often delay long-term commercial investments and see a decrease in expectations for financial performance (Berkman, Jacobsen, & Lee, 2011;Shan & Gong, 2012). These economic pressures and uncertainties make domestic firms' future relatively unclear (Muller & Kräussl, 2011).…”

Section: Expansion Of Social Tiesmentioning

confidence: 99%

Liability of foreignness, natural disasters, and corporate philanthropy

Mithani

2017

J Int Bus Stud

111

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This study examines how philanthropy can mitigate liability of foreignness (LOF) in the aftermath of a national disaster. A major disaster restructures the social landscape, creating an avenue for corporate contributions to play a role in recovery and relief efforts. This social restructuring offers a valuable opportunity for multinational enterprises (MNEs) to establish strong local ties. In turn, MNE contributions at such times have a stronger impact on their local acceptance. Thus, MNEs can use these events to strengthen their position in the community and mitigate LOF. Using the context of a national disaster in India, I test these arguments with a sample of 190 MNEs and 660 domestic firms. I found that in the aftermath of the disaster, the increase in MNE contributions was much larger and less strongly tied to promotional activities than the increase in contributions from domestic firms, and this difference persisted over time. Moreover, the performance implication of post-disaster philanthropy was stronger for MNEs than for domestic firms. These findings suggest that philanthropy plays a more strategic role for MNEs in the aftermath of a disaster and it has a pronounced effect on mitigating LOF.

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Section: Expansion Of Social Tiesmentioning

confidence: 99%

Liability of foreignness, natural disasters, and corporate philanthropy

Mithani

2017

J Int Bus Stud

111

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“…French and Poterba (1991) found that US investors generally allocated 94% of their funds for investment in US assets, even though the proportion of the US capital market to the global market was only 48%. Shan and Gong (2012) determined that a negative mood among investors significantly lowered the stock returns for firms headquartered nearer the epicenter of the Wenchuan earthquake in China relative to areas farther away. Edmans et al (2007) observed that a loss in the World Cup decreased the next-day abnormal stock returns of the country who loses and the results were also robust for international cricket, rugby, and basketball games.…”

Section: Home Bias In Stock Pricingmentioning

confidence: 99%

Air pollution, stock returns, and trading activities in China

Ying

2018

Pacific-Basin Finance Journal

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“…A large number of these studies, however, take an indirect approach. The likely effect of sentiment on returns is deduced from the investigation of other variables (Kurov, 2010;Kaplanski & Levy, 2012;Kaustia & Knupfer, 2012) or specific events such as natural disasters (Kaplanski & Levy, 2010;Shan & Gong, 2012), manmade disasters (Drakos, 2010), sporting events (Chang, Chen, Chou & Lin, 2012;Curatola, Donadelli, Kizys & Riedel, 2016), and religious festivities (Białkowski, Etebari & Wisniewski, 2012). The sentiment, inferred using the aforementioned methods, may not represent investor sentiment in its entirely or may misrepresent sentiment.…”

Section: Introductionmentioning

confidence: 99%