Journalists and the Stock Market

Abstract

We find that a small set of financial columnists has a causal effect on short-term aggregate stock market prices. For some journalists ("bulls") the market reaction is consistently positive, whereas for others ("bears") it is negative. Because bulls and bears are rotated exogenously in our setting, we can make causal inferences about the media’s impact on aggregate market returns. Journalist effects are much stronger after extreme returns, suggesting that amplification or attenuation of existing sentiment is the mechanism underlying the financial media’s influence.

Keywords: Media Bias, Market Efficiency, Financial Journalism

JEL Classification: H53, I38, J31, J33