Headlines and Bottom Lines: Attention and Learning Effects from Media Coverage of Mutual Funds
49 Pages Posted: 20 Mar 2005
Date Written: Februaty 2007
To study attention and learning effects in financial markets, we investigate the role of media coverage in investment decisions of mutual fund investors and the consequent effects on fund flows. Employing a database of nearly 10,000 news articles and controlling for endogeneity in media coverage, we find that fund characteristics affect the probability of a news story and that the existence and stance of media coverage affects net investor flows into the fund in ways consistent with investor attention and learning.
Keywords: mutual funds, attention, learning, fund flows, media
JEL Classification: G20
Suggested Citation: Suggested Citation