Searching for Gambles: Gambling Sentiment and Stock Market Outcomes

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

61 Pages Posted: 25 Jul 2015 Last revised: 8 Feb 2021

See all articles by Yao Chen

Yao Chen

University of Exeter Business School

Alok Kumar

University of Miami - Miami Herbert Business School

Chendi Zhang

University of Exeter Business School

Date Written: February 12, 2020

Abstract

Using Internet search volume for lottery to capture gambling sentiment shifts, we show that when the overall gambling sentiment is strong, investor demand for lottery stocks increases, these stocks earn positive short-run abnormal returns, managers are more likely to split stocks to cater to the increased demand for low-priced lottery stocks, and initial public offerings (IPOs) earn higher first day returns. Further, the sentiment-return relation is stronger among low institutional ownership firms, headquartered in regions where gambling is more acceptable and local bias is stronger. These results suggest that gambling sentiment has a spillover effect on the stock market.

Keywords: Gambling sentiment; lottery-type stocks; investor attention; catering; stock splits; IPO first-day return

JEL Classification: G11; G12; G14

Suggested Citation

Chen, Yao and Kumar, Alok and Zhang, Chendi, Searching for Gambles: Gambling Sentiment and Stock Market Outcomes (February 12, 2020). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming , Available at SSRN: https://ssrn.com/abstract=2635572 or http://dx.doi.org/10.2139/ssrn.2635572

Yao Chen

University of Exeter Business School ( email )

Streatham Court
Exeter, EX4 4PU
United Kingdom

Alok Kumar (Contact Author)

University of Miami - Miami Herbert Business School ( email )

517B Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://sites.google.com/view/alokmiami/home

Chendi Zhang

University of Exeter Business School ( email )

Streatham Court
Xfi Building, Rennes Dr.
Exeter, EX4 4JH
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
968
Abstract Views
3,921
Rank
43,987
PlumX Metrics