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The price evolution in financial markets under influence of published opinions

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  • Zhang, Xiaodi

Abstract

Opinions by media experts and pundits in both traditional media outlets and online venues influence investors. While a published opinion could be more accurate than that of a typical investor, its influence displaces many independent views and has the potential to introduce a shared error. My probabilistic trading model characterizes such influence and demonstrates how the “wisdom of the crowds” effect leads convergence of prices to the fundamental value. I use two corporate events to test the model, and find evidence consistent with the theoretical predictions.

Suggested Citation

  • Zhang, Xiaodi, 2025. "The price evolution in financial markets under influence of published opinions," Journal of Financial Markets, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:finmar:v:72:y:2025:i:c:s138641812400065x
    DOI: 10.1016/j.finmar.2024.100947
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    References listed on IDEAS

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