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Are investors guided by the news disclosed by companies or by journalists?

Shang, Z., Brooks, C. ORCID: and McCloy, R. ORCID: (2014) Are investors guided by the news disclosed by companies or by journalists? Journal of behavioral and experimental finance, 1. pp. 45-60. ISSN 2214-6350

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To link to this item DOI: 10.1016/j.jbef.2014.01.003


Most previous studies demonstrating the influential role of the textual information released by the media on stock market performance have concentrated on earnings-related disclosures. By contrast, this paper focuses on disposal announcements, so that the impacts of listed companies’ announcements and journalists’ stories can be compared concerning the same events. Consistent with previous findings, negative words, rather than those expressing other types of sentiment, statistically significantly affect adjusted returns and detrended trading volumes. However, extending previous studies, the results of this paper indicate that shareholders’ decisions are mainly guided by the negative sentiment in listed companies’ announcements rather than that in journalists’ stories. Furthermore, this effect is restricted to the announcement day. The average market reaction–measured by adjusted returns–is inversely related only when the announcements are ignored by the media, but the dispersion of market reaction–measured by detrended trading volume–is positively affected only when announcements are followed up by journalists.

Item Type:Article
Divisions:Henley Business School > ICMA Centre
Life Sciences > School of Psychology and Clinical Language Sciences > Department of Psychology
ID Code:36268


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