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Hype or help? Journalists’ perceptions of mispriced stocks

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  • Jacobs, Heiko
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”.

Suggested Citation

  • Jacobs, Heiko, 2020. "Hype or help? Journalists’ perceptions of mispriced stocks," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 550-565.
    • Handle: RePEc:eee:jeborg:v:178:y:2020:i:c:p:550-565
    DOI: 10.1016/j.jebo.2020.07.029
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    More about this item

    Keywords

    Financial press; Media; Journalists; Behavioral finance; Mispricing;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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