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Conference Paper/Proceeding/Abstract 177 views

Tech Frenzy Fallout: When Hype Hits Hard and Stocks Crash

Pengfei Gao Orcid Logo, Arman Eshraghi Orcid Logo, Izidin El Kalak Orcid Logo, Jason Zezhong Xiao Orcid Logo

Tri-Uni Annual Conference (Newcastle University) 2022, 2nd FinTech Conference 2023, EAA 2023

Swansea University Author: Pengfei Gao Orcid Logo

Abstract

Inspired by the cyclical euphoria observed in technology sectors, similar to the dot-com and Bitcoin price bubbles, this research identifies how market hype surrounding new technologies can lead to significant financial instability. Specifically, we explore the ‘technomania’ phenomenon where initial...

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Published in: Tri-Uni Annual Conference (Newcastle University) 2022, 2nd FinTech Conference 2023, EAA 2023
Published:
URI: https://cronfa.swan.ac.uk/Record/cronfa70713
Abstract: Inspired by the cyclical euphoria observed in technology sectors, similar to the dot-com and Bitcoin price bubbles, this research identifies how market hype surrounding new technologies can lead to significant financial instability. Specifically, we explore the ‘technomania’ phenomenon where initial enthusiasm for emerging technologies results in exaggerated market expectations and subsequent corrections. Using textual analysis framed by the Gartner Hype Cycle, we evaluate the content of voluntary disclosures regarding various phases of hyped emerging technologies based on US 8-K filings from 2010 to 2019. Our robust empirical results indicate firms disclosing hyped emerging technologies can lead to an increased risk of a share price crash. This relationship is more pronounced for firms with high CEO overconfidence and uncertain future performance.In detail, disclosures during the initial excitement and disillusionment phases are associated with increased stock price crash risks, whereas disclosures during the maturity phase are associated with reduced risks. This study highlights the critical role of informed and rational responses to corporate disclosures in emerging technologies, urging a more measured investor approach to mitigate potential market disruptions.
College: Faculty of Humanities and Social Sciences

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