Could Executive Turnover Cause Investor Attention?

The limited attention theory states that investor attention is a scarce cognitive resource.One person could only selectively allocate attention to certain information with limited time and effort.In the series of events such as news and announcements of listed companies,what information can cause investors' selective and initiative attention? This article analyzes the relationship between executive turnover from Chinese listed companies and investor attention in the securities market.We focus on the influence of the specific events of listed companies at a certain period of time,and use technology of web crawler to obtain �investor attention� data from Sina Weibo platform in China.Starting with the executive change event is mainly due to two factors: On the one hand,the rapid development of new media provides more opportunities for company executive to frequently be exposed in public.when they play the role of company's spokesperson,any manner and behavior of executive is easily interpreted by the investor.On the other hand,as a major event in the corporate governance area,executives turnover is not only related to the company's future business decisions and development strategies,but also closely related to the individual wealth of investors.The reason we provide Chinese experience is that there is a unique phenomenon in China compared with developed countries' stock markets.Chinese listed companies often use the "diplomatic" language to confuse the public when announce the major event of executive turnover,resulting in the violation of the investors' rights and interests,and high risk for individual investors When there is a clear information gap in the capital market,whether and under what circumstances investors actively take care of such events,and how to effectively protect personal rights has become the topic of this paper.After a series of regression analysis and testing,this paper finds that there is a significant positive correlation between abnormal changes in executives and investor concerns.That is to say,the abnormal change event of the executives caused investors to pay attention to the increase of the probability of being 1.4627 times of the normal change,and the relationship is more prominent in the state-owned and better performing companies.Finally,practical evidence from the stock market portrays the economic consequences of concern.Our study contributes to the literature in several ways.Firstly,This article has some innovations in the research perspective.The existing literature has mainly studied the economic consequences of investor attention,specifically reflected in stock price volatility,stock volume,asset pricing and earnings announcement effect.We explore the causes of investors' attention effects by focusing on the role of significant events in listed companies,which enrich the research of the causes of attention effects.Secondly,finding the quantifiable and appropriate proxy variable for �investor attention� is the focus and difficulty of the academic field.This paper actively explores and supplements in that direction.With the rapid development of the Internet and information technology,the influence of new media continuously expanding.More and more individual investors can search,forward,comment and pay attention to relevant information of listed companies by social media platforms,therefore can interact with listed companies and obtain the companies' response.Following the above situation,the article regards the microblog original posts of individual investors on the relevant information of listed companies as the proxy variable of �investor attention�.It not only breaks through the limitations of individuality and objectivity from traditional agent variables,but also better reflects the subjective investors' behavior of reading and thinking than the modern agent variables dominated of network search.Thirdly,how to effectively protect investors' rights has always been an significant issue in the corporate governance of emerging countries.The law and finance literature emphasize the importance of alternative mechanisms beyond the legal minimum in protecting investors' rights in emerging markets where the formal legal protection is relatively weak.Building an effective and efficient social media platform can better inspire investors to actively pay their attention to certain information of listed companies.Such investors' active attention may form a monitoring role in listed companies and substitute for some outside mechanisms to protect their own rights.Our finding not only has important inspiration to construct the informal institutions in emerging market countries with insufficient external governance,but also has important reference significance for the healthy development of other emerging capital markets.