Public attention, investor sentiment and stock markets: Evidence from Chinese listed firms

The COVID-19 pandemic’s onset introduced unforeseen disruptions to the Chinese stock market. This study uses all A-share companies from 20 January to 26 April 2020, as research samples to explore the impact of public attention on investor sentiment and the stock market during the pandemic. Our findings indicate that the heightened public attention with pandemic-related information triggers disorderly trading behaviours, which ultimately leads to a decline in stock returns, enhanced stock market volatility, and a climb in trading volume. Mechanism tests further find that the level of public concern about COVID-19 mainly affects investor sentiment, which in turn has a negative impact on the stock market. Additionally, heterogeneity analyses reveal that during the COVID-19 pandemic, this negative effect of public attention on stock market is more pronounced in labour-intensive firms and the tertiary sector. Our conclusions provide practical insights and guidance for financial regulatory agencies to maintain stock market stability during sudden public events.