What is reported about the companies in the media is less important than the amount of public awareness that their visibility in the media attracts
By betting on stocks that lack media coverage, investors may be doing themselves a favour, according to a new research paper co-authored by INSEAD Assistant Finance Professor Lily Hua Fang and Associate Professor of Finance Joel Peress.
The study found that investors stand to gain comparatively higher returns by punting on stocks that have no media coverage than those that enjoy a high media profile. Indeed, the study’s survey of a portfolio of stocks with no media coverage found that it outperformed another portfolio of stocks with high media coverage by three per cent annually, even after controlling for commonly known risk factors such as market, size, book-to-market, momentum, and liquidity.
[This article is republished courtesy of INSEAD Knowledge, the portal to the latest business insights and views of The Business School of the World. Copyright INSEAD 2024]