Just Spell My Ticker Right

Amusing new study shows that both positive and negative news about a company on CNBC makes its stock go up. Apparently all companies should want anymore is to have their tickers spelled right.

This paper examines investor reaction to stale information using a novel data set containing a time-stamped transcript of the financial news network CNBC. I measure changes in stock price and trading volume at the precise time that a company is mentioned on CNBC in the 24 hours following a corporate news event, and strong evidence that some investors react to stale news. There is a significant increase in stock price at the precise time that a company is mentioned on CNBC following a positive news event. Surprisingly, there is also a significant increase in stock price at the precise time that a company is mentioned on CNBC following a negative news event. This puzzle is not explained using observable differences between positive and negative news events or their subsequent mentions. Evidence using cross-sectional variation in the number of positive and negative words suggests that media attention can inate asset prices in the presence of short-sale constraints as investors with the most optimistic valuations are able to buy while those with the most pessimistic valuations are unable to sell short.

More here.


  1. #watchingwiththesoundoff


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