News Dissemination and Investor Attention

In the spirit of Merton (1987), we find that improving the dissemination of company news increases the attention investors pay to a firm. We exploit a regulatory change, the European Union Transparency Directive, which pushed Continental European firms to use English-language wire services. We find that the adoption of such a wire service results in less stock price drift and more trading volume after a firm?s earnings announcements, consistent with the idea that the firm?s method of news dissemination affects investors? attention. Our results are robust to self-selection and other endogeneity concerns.