Cross Regional Differences in News Tone and the Change in Local Portfolios

Posted: 27 Jul 2016 Last revised: 23 Feb 2020

See all articles by Taylan Mavruk

Taylan Mavruk

University of Gothenburg - Centre for Finance - School of Business, Economics and Law

Multiple version iconThere are 2 versions of this paper

Date Written: October 7, 2018

Abstract

This paper examines cross regional differences in news tone, for the same news event, and relates it to trading activity of local and non-local investors. Using a combination of detailed investor and media data the results show that when news, particularly locally sourced news, is republished across regions the difference in trading activity of local and non-local investors decreases, suggesting that information asymmetry between these investor groups decreases. Individual investors seem to realize that information in republished news has already been internalized by the market and show news-contrarian trading behavior, which suggests that they are able to distinguish good firms from bad firms. Thus adverse selection can explain some of the observed news-contrarian trading behavior of individual investors.

Keywords: Cross regional differences in tone, local media, local trades, information asymmetry.

JEL Classification: G11, G14

Suggested Citation

Mavruk, Taylan, Cross Regional Differences in News Tone and the Change in Local Portfolios (October 7, 2018). Swedish House of Finance Research Paper No. 17-12, Available at SSRN: https://ssrn.com/abstract=2814483 or http://dx.doi.org/10.2139/ssrn.2814483

Taylan Mavruk (Contact Author)

University of Gothenburg - Centre for Finance - School of Business, Economics and Law ( email )

Vasagatan 1
Gothenburg, 40530
Sweden

HOME PAGE: http://www.cff.handels.gu.se/faculty-presentation/taylan-mavruk/

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