Investor PSY-chology surrounding “Gangnam Style”

• We find that media attention drives the price away from fundamentals.
• We use ‘Gangnam Style’ as an exogenous shock to the attention level of a company.
• Attention of the individual investors is proxied by the flash mobs on YouTube.
• Local trading by individual investors is captured by our KRX microstructure data.

The global success of the song, “Gangnam Style”, by the Korean rapper PSY in 2012, was an exogenous shock to investor enthusiasm for DI Corp., a Korean semiconductor manufacturer. Although DI Corp.'s business is not related to the entertainment industry, its co-CEO is the father of PSY. Using the count of flash mob and parody videos of “Gangnam Style” on YouTube from different countries and domestic regions as a proxy for the enthusiasm of individual investors, we find that individual investors became net buyers of DI Corp. stock when the attention level increased in their neighborhood (countries). Accordingly, the attention drove up the stock price by 800% without information on the stock's fundamentals.