Home-Country Media Slant and Equity Prices

68 Pages Posted: 13 Jun 2019 Last revised: 6 Jan 2021

See all articles by Benjamin Golez

Benjamin Golez

University of Notre Dame

Rasa Karapandza

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting; New York University (NYU) - New York University Abu Dhabi

Date Written: March 31, 2020

Abstract

We study national newspaper reporting and investor beliefs across the U.S., Germany, and Japan. Using novel large-scale hand-coded media data for the automotive industry, we show that news about companies is systematically more positive in companies’ home countries than abroad. Home-country media slant increases during bad times for companies, and it correlates strongly with equity prices. Cross-country difference in news tone predicts temporary price deviations of cross-listed stocks. Abnormally high home-media news tone predicts low monthly domestic stock returns. The effects are strongest for confirmatory news and weakest when home-biased investors are likely distracted by sporting events.

Keywords: media slant, media bias, textual analysis, investor sentiment, cross-listed stocks, confirmatory bias

JEL Classification: L82, D23, F23

Suggested Citation

Golez, Benjamin and Karapandza, Rasa, Home-Country Media Slant and Equity Prices (March 31, 2020). Available at SSRN: https://ssrn.com/abstract=3396726 or http://dx.doi.org/10.2139/ssrn.3396726

Benjamin Golez (Contact Author)

University of Notre Dame ( email )

256 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
(574) 631-1458 (Phone)

HOME PAGE: http://business.nd.edu/BenGolez/

Rasa Karapandza

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Finance and Accounting ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

New York University (NYU) - New York University Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

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