We investigate the reallocation of retail investor attention during firm-specific disruptive events, such as IPOs. While IPOs increase investor attention across listed firms, those geographically and industrially close to the IPO attract the most significant interest. Attention builds up prior to the IPO, peaks during the event, and remains elevated afterward, particularly for geographically proximate firms. Notably, geographic proximity plays a dominant and persistent role, even under firm-specific and market-wide uncertainty. Attention also responds systematically to information, increasing with negative and uncertain tone in IPO prospectuses, consistent with the negativity bias. Conversely, high levels of aggregate market attention divert attention away from IPO events, although this effect is attenuated for geographically proximate firms. We further show that heightened attention is associated with a positive contemporaneous return effect followed by a reversal over longer horizons, consistent with temporary price pressure. Our findings indicate that retail investor attention is allocated in a systematic and economically meaningful way, reflecting the role of local information advantages, social and geographic proximity
Mengoli, S., Pattitoni, P. (2026). Spotlight on the neighborhood: The spillover effect of IPOs on retail investor attention. JOURNAL OF EMPIRICAL FINANCE, 88, 1-22 [10.1016/j.jempfin.2026.101752].
Spotlight on the neighborhood: The spillover effect of IPOs on retail investor attention
Stefano Mengoli
Primo
;Pierpaolo PattitoniSecondo
2026
Abstract
We investigate the reallocation of retail investor attention during firm-specific disruptive events, such as IPOs. While IPOs increase investor attention across listed firms, those geographically and industrially close to the IPO attract the most significant interest. Attention builds up prior to the IPO, peaks during the event, and remains elevated afterward, particularly for geographically proximate firms. Notably, geographic proximity plays a dominant and persistent role, even under firm-specific and market-wide uncertainty. Attention also responds systematically to information, increasing with negative and uncertain tone in IPO prospectuses, consistent with the negativity bias. Conversely, high levels of aggregate market attention divert attention away from IPO events, although this effect is attenuated for geographically proximate firms. We further show that heightened attention is associated with a positive contemporaneous return effect followed by a reversal over longer horizons, consistent with temporary price pressure. Our findings indicate that retail investor attention is allocated in a systematic and economically meaningful way, reflecting the role of local information advantages, social and geographic proximity| File | Dimensione | Formato | |
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