We show that retail investors’ cyclical demand for lottery stocks, which tends to peak at the turn-of-the-month (ToM), has implications for firms’ financial activities. Consistent with the notion that the peak in demand is driven by a propensity to gamble that is associated with inattention, we find underreaction to earnings news issued at the ToM by lottery-type firms located in areas with many gambling investors. Lottery-type firms are more likely to issue bad earnings news at ToM, thus benefiting from a less negative price reaction. Similarly, seasoned equity offerings (SEOs) by lottery-type firms are often strategically timed at the ToM, conceivably to take advantage of local retail investors’ underreaction and thereby temper the typically negative immediate stock price reaction to the issuance news. Further suggestive of strategic exploitation of local investors peak in demand at the ToM period, lottery-type firms’ SEOs at the ToM are also more likely to be offered via an accelerated method that saves the direct marketing costs associated with other offer methods.

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月末彩票类股与企业策略

我们表明，散户投资者对彩票股的周期性需求往往在月底 (ToM) 达到顶峰，这对公司的财务活动有影响。与需求高峰是由与注意力不集中相关的赌博倾向驱动的观点一致，我们发现对位于有许多赌博投资者的地区的彩票公司在 ToM 上发布的收益新闻反应不足。彩票类公司更有可能在 ToM 发布不利的盈利消息，从而受益于较不负面的价格反应。同样，彩票类公司的经验丰富的股票发行 (SEO) 通常在 ToM 进行战略性定时，可以想象利用当地散户投资者的反应不足，从而缓和通常对发行消息的负面即时股价反应。