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When the tail wags the dog: industry leaders, limited attention,and spurious cross-industry information diffusion

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When the tail wags the dog : industry leaders, limited attention,and spurious cross-industry information diffusion. / Cen, Ling; Chan, Kalok; Dasgupta, Sudipto et al.

In: Management Science, Vol. 59, No. 11, 11.2013, p. 2566–2585.

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Cen L, Chan K, Dasgupta S, Gao N. When the tail wags the dog: industry leaders, limited attention,and spurious cross-industry information diffusion. Management Science. 2013 Nov;59(11):2566–2585. Epub 2013 Jun 14. doi: 10.1287/mnsc.2013.1722

Author

Cen, Ling ; Chan, Kalok ; Dasgupta, Sudipto et al. / When the tail wags the dog : industry leaders, limited attention,and spurious cross-industry information diffusion. In: Management Science. 2013 ; Vol. 59, No. 11. pp. 2566–2585.

Bibtex

@article{7e00fe599b8e440db0ec89df8be8de88,
title = "When the tail wags the dog: industry leaders, limited attention,and spurious cross-industry information diffusion",
abstract = "Within an industry, stock returns of larger firms lead those of smaller firms, suggesting an intraindustry information diffusion process. Most industry leaders, however, have business segments in other industries (henceforth, minor-segment industries), whereas most small firms are pure players operating in one industry only. If investors cannot filter out the irrelevant information from the leaders' minor segments, the pure players will be mispriced due to spurious cross-industry information diffusion (SCIID). Consistent with the SCIID hypothesis, we document both a strong contemporaneous and a lead–lag relation in stock returns between firms from industry leaders' minor-segment industries and pure players in the industry leaders' major-segment industry. Our results are not due to potential missing common factors or economic relationships between pure players and firms in the minor-segment industries.",
keywords = "limited attention, category learning, industry information diffusion",
author = "Ling Cen and Kalok Chan and Sudipto Dasgupta and Ning Gao",
year = "2013",
month = nov,
doi = "10.1287/mnsc.2013.1722",
language = "English",
volume = "59",
pages = "2566–2585",
journal = "Management Science",
issn = "0025-1909",
publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",
number = "11",

}

RIS

TY - JOUR

T1 - When the tail wags the dog

T2 - industry leaders, limited attention,and spurious cross-industry information diffusion

AU - Cen, Ling

AU - Chan, Kalok

AU - Dasgupta, Sudipto

AU - Gao, Ning

PY - 2013/11

Y1 - 2013/11

N2 - Within an industry, stock returns of larger firms lead those of smaller firms, suggesting an intraindustry information diffusion process. Most industry leaders, however, have business segments in other industries (henceforth, minor-segment industries), whereas most small firms are pure players operating in one industry only. If investors cannot filter out the irrelevant information from the leaders' minor segments, the pure players will be mispriced due to spurious cross-industry information diffusion (SCIID). Consistent with the SCIID hypothesis, we document both a strong contemporaneous and a lead–lag relation in stock returns between firms from industry leaders' minor-segment industries and pure players in the industry leaders' major-segment industry. Our results are not due to potential missing common factors or economic relationships between pure players and firms in the minor-segment industries.

AB - Within an industry, stock returns of larger firms lead those of smaller firms, suggesting an intraindustry information diffusion process. Most industry leaders, however, have business segments in other industries (henceforth, minor-segment industries), whereas most small firms are pure players operating in one industry only. If investors cannot filter out the irrelevant information from the leaders' minor segments, the pure players will be mispriced due to spurious cross-industry information diffusion (SCIID). Consistent with the SCIID hypothesis, we document both a strong contemporaneous and a lead–lag relation in stock returns between firms from industry leaders' minor-segment industries and pure players in the industry leaders' major-segment industry. Our results are not due to potential missing common factors or economic relationships between pure players and firms in the minor-segment industries.

KW - limited attention

KW - category learning

KW - industry information diffusion

U2 - 10.1287/mnsc.2013.1722

DO - 10.1287/mnsc.2013.1722

M3 - Journal article

VL - 59

SP - 2566

EP - 2585

JO - Management Science

JF - Management Science

SN - 0025-1909

IS - 11

ER -