TY  - UNPD
A1  - Donadelli, Michael
A1  - Kizys, Renatas
A1  - Riedel, Max
T1  - Globally dangerous diseases: bad news for main street, good news for Wall Street?
T2  - SAFE working paper series ; No. 158
N2  - his paper examines whether investor mood, driven by World Health Organization (WHO) alerts and media news on globally dangerous diseases, is priced in pharmaceutical companies' stocks in the United States. We concentrate on irrational investors who buy and sell pharmaceutical companies' stocks guided by beliefs as opposed to rational expectations. We argue that disease-related news (DRNs) should not trigger rational trading. We find that DRNs have a positive and significant sentiment effect among investors (on Wall Street). The effect is stronger (weaker) for small (large) companies, who are less (more) likely to engage in the development of new vaccines in the wake of DRNs. A potential negative mood (on Main Street) – induced by disease related fear – does not alter the positive sentiment effect. Our findings give rise to profitable trading strategies leading to significantly positive performances. Overall, this unparalleled research shows that large events of devastating nature to the economy can be considered as good news to some groups of interest, such as stock market traders.
T3  - SAFE working paper - 158 
KW  - WHO alerts
KW  - investor sentiment
KW  - pharmaceutical industry
KW  - trading strategies
Y1  - 2016
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/42138
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-421383
UR  - https://ssrn.com/abstract=2881220
IS  - December 6, 2016
PB  - SAFE
CY  - Frankfurt am Main
ER  -