Information Discovery in the Digital Age: Online Search Activity and Earnings Announcements
Saurabh Ahluwalia  1@  
1 : The University of New Mexico [Albuquerque]

This paper leverages Google Trends search volume data from 2004-2008 as a proxy for investor information demand. The analysis reveals that greater search activity prior to earnings announcements is positively associated with future market reaction to earnings announcements, pre-earnings announcement drift and buying pressure. The results indicate investors uncover value-relevant insights through online research which subsequently enter prices through trading around earnings announcements. Notably, search volume is positively associated with market reaction to earnings announcements and pre-announcement drifts for more obscure firms where data is scarce. Overall, this paper provides large-sample evidence validating theoretical models where dispersed private information is incorporated into stock prices. The study advocates that democratizing data access enhances pricing efficiency by promoting more informed market participation.


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