Associate Professor of Finance | Department of Finance
Atlanta, GA, UNITED STATES
Professor Clarke is an award winning teacher and researcher in the fields of investment banking, finance and analysis.
One of two College-wide teaching awards given annually 2010
2008 - 2011
B.A., Mathematics and Economics
Jonathan Clarke, Hailiang Chen, Ding Du, Yu Jeffrey Hu
Does fake news in financial markets attract more investor attention and have a significant impact on stock prices? We use the SEC crackdown of stock promotion schemes in April 2017 to examine investor attention and the stock price reaction to fake news articles. Using data from Seeking Alpha, we find that fake news stories generate significantly more attention than a control sample of legitimate articles. We find no evidence that article commenters can detect fake news. Seeking Alpha editors have only modest ability to detect fake news. The broader stock market appears to price fake news correctly. The stock price reaction to the release of fake news is not significantly different than a matched control sample over short and longer-term windows. We conclude by presenting a machine learning algorithm that is successful in identifying fake news articles.
Daniel Bradley, Jonathan Clarke, Linghang Zeng
Between 2009 and 2013, Theflyonthewall. com (FLY) leaks 58% of recommendation revisions, often before the market open and before I/B/E/S time stamps. We show FLY improves price discovery, but leaked recommendations hamper the ability of brokers to offer price improvement on trades routed through them. Three large brokers sued FLY and ultimately lost, upon which the average broker experienced-1.3% abnormal announcement returns. Consequently, brokers trim their analyst workforce and number of stocks covered. Overall, this disruption has negatively impacted the incentives to produce information leading to a further decline in the scope of the sell-side research industry.
Jonathan Clarke, Arif Khurshed, Alok Pande, Ajai K Singh
We use India's unique regulatory design to test sentiment-based models of IPO initial returns. Using a sample of 362 Indian offerings from 2003 to 2014, we find that the traditional measure of IPO underpricing averages 23%. We decompose the traditional underpricing measure into two components: one related to voluntary underpricing by the underwriter and the other component related to the IPO's first-day trading activity. We find minimal levels of voluntary underpricing. However, initial returns on the first day average 14% and are primarily driven by the unmet demand of non-institutional investor groups. Overall, our results support sentiment-based models of IPO initial returns.
James Cicon, Jonathan Clarke, Stephen P Ferris, Narayanan Jayaraman
This study examines whether the “soft” information present in merger and acquisition (M&A) announcement press releases contains incrementally valuable news relative to traditional “hard” data. Using the methodology of Loughran and McDonald , we construct measures of synergy expectations and managerial optimism for more than 1,200 M&A announcements over the period 1995–2007. We find that synergy expectations are positively related to announcement period returns, longer-run performance, and the market's reaction to quarterly earnings announcements. Managerial optimism is insignificant for explaining a merger's subsequent performance. We conclude that the soft information contained in M&A announcements concerning synergy expectations can provide useful information to investors.
Daniel Bradley, Jonathan E Clarke, Suzanne S Lee, Chayawat Ornthanalai
We demonstrate that time stamps reported in I/B/E/S for analysts’ recommendations released during trading hours are systematically delayed. Using newswire‐reported time stamps, we find 30‐minute returns of 1.83% (−2.10%) for upgrades (downgrades), but for this subset of recommendations we find corresponding returns of −0.07% (−0.09%) using I/B/E/S‐reported time stamps. We also examine the information content of recommendations relative to management guidance and earnings announcements. Our evidence suggests that analysts’ recommendations are the most important information disclosure channel examined.