How could investors in financial market respond to entertainers’ romance rumor?

Abstract

Entertainers could be easily involved in gossip like romance rumor because the media and public are very interested in their privacy. As such news is reported, it could affect damage to both entertainment agencies and entertainers in terms of profits. In financial market, investors could consider such news as an important information to decide whether to invest or not. Therefore, those news could affect the stock prices of the listed companies. Using the event study method, this study analyzed how romance rumor impacts on the stock price of entertainment agencies. As a result, romance rumor generally has a negative effect on stock price from one day before the event day to the event day. In detail, the ‘accept’ case has an adverse impact on stock price one day before the event day whereas the ‘deny’ case has no effect on stock price. It can be said that the ‘accept’ case is no longer rumor. ? Serials Publications Pvt. Ltd.