EFFECT OF MEDIA COVERAGE ON INVESTORS' REACTION TO EARNINGS ANNOUNCEMENTS: INSIGHT FROM S-REIT

Abstract

This study examines the media coverage effect on investors’ reaction to 476 quarterly earnings announcements made by REITs in Singapore from 2007 to 2013. Since media plays a vital role in disseminating information to investors, one would expect it to have certain impacts on investors’ reaction in Singapore’s young and growing REIT market. Therefore, the objectives of this study are to determine the relationship between media coverage and the initial return response during earnings announcements as well as the return drift after earnings announcements, using event study methodology.

The finding shows a stronger initial response to good earnings news with an average 3-day cumulative abnormal return of 1.39% if the news is covered in media. However, no significant result is found for initial response to bad news. Following that, the study documents significant 10-day post earnings announcement drifts for both good and bad news. It also concludes that media coverage plays a meaningful role in reducing the post earnings announcement return drifts.