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  • 2012
  • Article
  • Review of Financial Studies

Journalists and the Stock Market

By: Christopher Parsons, C. Dougal, J. Engelberg and D. Garcia
  • Format:Print
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Abstract

We use exogenous scheduling of Wall Street Journal columnists to identify a causal relation between financial reporting and stock market performance. To measure the media's unconditional effect, we add columnist fixed effects to a daily regression of excess Dow Jones Industrial Average returns. Relative to standard control variables, these fixed effects increase the R2 by about 35%, indicating each columnist's average persistent "bullishness" or "bearishness." To measure the media's conditional effect, we interact columnist fixed effects with lagged returns. This increases explanatory power by yet another one-third, and identifies amplification or attenuation of prevailing sentiment as a tool used by financial journalists.

Keywords

Media; Financial Reporting; Financial Markets

Citation

Parsons, Christopher, C. Dougal, J. Engelberg, and D. Garcia. "Journalists and the Stock Market." Review of Financial Studies 25, no. 3 (March 2012): 639–679.
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More from the Authors

    • January 2014
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More from the Authors
  • Networks and Productivity: Causal Evidence from Editor Rotations By: J. Brogaard, J. Engelberg and Christopher Parsons
  • The Timing of Pay By: Christopher Parsons and E. Van Wesep
  • Voice Pitch and the Labor Market Success of Male Chief Executive Officers By: Christopher Parsons, W. Mayew and M. Venkatachalam
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