Cryptic excitement: unveiling market reactions to Facebook's Metaverse and potential manipulation in China's stock market

•Metaverse disclosures of Chinese listed companies significantly affects their stock prices.•The effect is more pronounced for companies releasing Metaverse disclosures after Facebook's re-branding event.•Insiders time their transactions and earn substantial gains by selling shares during the M...

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Bibliographic Details
Published in:Finance research letters 2024-02, Vol.60, p.104886, Article 104886
Main Authors: Huang, Lingyu, Mao, Ruoyu
Format: Article
Language:English
Subjects:
Corporate disclosures
Insider trading
Market reaction
Metaverse
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Summary:•Metaverse disclosures of Chinese listed companies significantly affects their stock prices.•The effect is more pronounced for companies releasing Metaverse disclosures after Facebook's re-branding event.•Insiders time their transactions and earn substantial gains by selling shares during the Metaverse mania. This study examines the impact of Facebook's rebranding on the Metaverse's renewed interest, revealing potential market manipulation concerns in China. Analyzing Chinese publicly listed firms entering the Metaverse, the research notes a surge in initial disclosures, aligned with Facebook's rebranding and increased investor sentiment. Investors' exaggerated reactions to Metaverse-related announcements are observed, alongside insiders' timed transactions leading to substantial profits during the Metaverse frenzy. The results underscore Chinese regulators' worries, highlighting the susceptibility of investors to companies' initial Metaverse disclosures.
ISSN:1544-6123
1544-6131
DOI:10.1016/j.frl.2023.104886