The "tone effect" of news on investor beliefs: an experimental approach
- We investigate the effect of the tone of news on investor stock price expectations and beliefs. In an experimental study we ask subjects to estimate a future stock price for twelve real listed companies. As additional information we provide them with historical stock prices and extracts from real newspaper articles. We propose a way to manipulate the tone of news extracts without distorting its content. Subjects in different treatment groups read news items that are written either in positive or negative tone for each stock. We find that subjects tend to predict a significantly higher (lower) return for stocks after reading positive (negative) tone news. The effect is especially pronounced for stocks with poor past performance. Subjects are more likely to be optimistic (pessimistic) about the economy and to buy (sell) stocks after reading positive (negative) than negative (positive) tone news. Our results show that the news media might affect not only how investors perceive information, but also what they do in response to it.
Author: | Ronald Bosman, Roman KräusslORCiDGND, Elizaveta Mirgorodskaya |
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URN: | urn:nbn:de:hebis:30:3-386632 |
URL: | https://ifk-cfs.de/fileadmin/downloads/publications/wp/2015/CFS_WP_522.pdf |
Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 522 |
Series (Serial Number): | CFS working paper series (522) |
Publisher: | Center for Financial Studies |
Place of publication: | Frankfurt, M. |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2015 |
Year of first Publication: | 2015 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2015/12/08 |
Tag: | Experiment; Framing Effect; Investment Decisions; Investor Sentiment; News; Price Expectations; Tone |
Issue: | This Draft:March 2015 |
Page Number: | 76 |
HeBIS-PPN: | 368523284 |
Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Licence (German): | Deutsches Urheberrecht |