Political Polarization in Financial News

51 Pages Posted: 24 Feb 2020 Last revised: 16 May 2023

See all articles by Eitan Goldman

Eitan Goldman

Indiana University - Kelley School of Business - Department of Finance; European Corporate Governance Institute (ECGI)

Nandini Gupta

Indiana University - Kelley School of Business - Department of Finance

Ryan D. Israelsen

Michigan State University - Department of Finance

Date Written: May 11, 2023

Abstract

Comparing coverage of the same corporate financial news by the conservative Wall Street Journal and the liberal New York Times, we find strong evidence of political polarization in their reporting on both the intensive and extensive margins of coverage. We show that this politics-induced disagreement in corporate financial news leads to an increase in abnormal trading volume for the most politically extreme firms. Our results highlight a new source of investor disagreement, arising out of polarized reporting of corporate financial news, that generates trade among investors.

Keywords: Media bias, Financial news, Finance and politics, Textual analysis, Trading volume, Individual investors

JEL Classification: G30, G12, G14, D72

Suggested Citation

Goldman, Eitan and Gupta, Nandini and Israelsen, Ryan D., Political Polarization in Financial News (May 11, 2023). Available at SSRN: https://ssrn.com/abstract=3537841 or http://dx.doi.org/10.2139/ssrn.3537841

Eitan Goldman

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-856-0749 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Nandini Gupta (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3416 (Phone)
812-855-5875 (Fax)

Ryan D. Israelsen

Michigan State University - Department of Finance ( email )

315 Eppley Center
East Lansing, MI 48824-1122
United States

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