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Tell less, get more? News topic concentration and stock market reaction

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  • Huang, Rui
  • Wu, Chongfeng

Abstract

This paper examines the effect of news topic concentration (TCR) on Chinese stocks. Our empirical findings reveal a U-shaped relationship between TCR and market reaction, which is mediated by investor attention. Information ambiguity complements attention’s role at low TCR. Moreover, TCR has a greater effect on stock prices when firms have lower institutional ownership, higher information uncertainty, and when the news originates from state-controlled media. Additionally, we observe that the U-shaped patterns differ across dominant meta-themes. Our results highlight the importance of the structure of the information present in its integration into asset prices and emphasize the role of journalists as key information intermediaries.

Suggested Citation

  • Huang, Rui & Wu, Chongfeng, 2025. "Tell less, get more? News topic concentration and stock market reaction," Finance Research Letters, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finlet:v:84:y:2025:i:c:s1544612325009985
    DOI: 10.1016/j.frl.2025.107740
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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