Selected publications from our research team

Help or Hype? Journalists' Perceptions of Mispriced Stocks

Type of Publication: Article in Journal

Help or Hype? Journalists' Perceptions of Mispriced Stocks

Author(s):
Jacobs, Heiko
Title of Journal:
Journal of Economic Behavior & Organization
Volume (Publication Date):
2020 (2020)
Number of Issue:
178
pages:
550-565
Keywords:
Financial press; Media; Journalists; Behavioral finance; Mispricing
Digital Object Identifier (DOI):
doi:https://doi.org/10.1016/j.jebo.2020.07.029
Link to complete version:
https://www.sciencedirect.com/science/article/abs/pii/S0167268120302511
Citation:
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Abstract

Abstract

The business press is a key information intermediary in stock markets, but little is known about how journalists themselves process information. To test competing hypotheses, I combine composite mispricing scores constructed from about 200 cross-sectional anomalies with the content of about two million firm-specific newspaper articles. I find that journalists tend to write positively (negatively) about stocks likely to be undervalued (overvalued). The effect is strongest for national newspapers and overvalued stocks. These and further findings collectively lend more, though not unambiguous, support to the bright side of financial journalism. In most cases, journalists act as “watchdogs”, not as “cheerleaders”.

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