The authors synthesized and extended recent research demonstrating that investor
recognition is a distinct, significant determinant of stock price movements.
Realized stock returns are strongly positively related to changes in investor
recognition, and expected returns are strongly negatively related to the level
of investor recognition. Moreover, companies time their financing and investing
decisions to exploit changes in investor recognition. Investor recognition
dominates stock price movements over short horizons, whereas fundamentals
dominate over longer horizons.