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Impacts of the mass media effect on investor sentiment

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  • Yang, Wen
  • Lin, Dongtong
  • Yi, Zelong

Abstract

Based on one set of micro-level survey data, we examine impacts of the mass media effect on investor sentiment. The financial information is distributed through three mass media channels. The study reveals that the mass media effect leads to investor sentiment fluctuation, and significantly affects investors’ trading decisions. Moreover, the impacts of media reports are asymmetric: in a rising market, investors pay more attention to optimistic reports and ignore those with a negative signal; by contrast, in a declining market, investors are more vulnerable to pessimistic reports, and reports with active information do not bring a significant effect.

Suggested Citation

  • Yang, Wen & Lin, Dongtong & Yi, Zelong, 2017. "Impacts of the mass media effect on investor sentiment," Finance Research Letters, Elsevier, vol. 22(C), pages 1-4.
    • Handle: RePEc:eee:finlet:v:22:y:2017:i:c:p:1-4
    DOI: 10.1016/j.frl.2017.05.001
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    Cited by:

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    2. Jesús Manuel Palma-Ruiz & Julen Castillo-Apraiz & Raúl Gómez-Martínez, 2020. "Socially Responsible Investing as a Competitive Strategy for Trading Companies in Times of Upheaval Amid COVID-19: Evidence from Spain," IJFS, MDPI, vol. 8(3), pages 1-13, July.
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    11. Alexander Benov & Maria Semenova, 2021. "Bank Runs And Media Freedom: What You Don’t Know Won’t Hurt You?," HSE Working papers WP BRP 81/FE/2021, National Research University Higher School of Economics.
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    More about this item

    Keywords

    Mass media; media effect; Investor sentiment; Logit model;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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