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Media and Investment Management

Auteurs : Gideon Ozik
EDHEC Business School

Ronnie Sadka
Boston College, Carroll School of Management, Chestnut Hill, Massachusetts

This study measures the differential impact of alternative media outlets.

EDHEC Working Paper

EDHEC Working Paper

We classify news items about equity hedge funds over 1999-2008 into three source groups: General newspapers, Specialized magazines, and Corporate Communication. Applying a textual analysis to news items, we uncover three types of media biases. First, a reporting style bias, that is, when a fund is covered by multiple sources at the same time, the sentiment is most positive in Corporate coverage and least in General coverage. The differences in source sentiment are more significant in cases of exclusive coverage, indicating a second bias, editorial selection. Finally, examining post-coverage, sentiment-adjusted fund performance, we document that Corporate-covered funds outperform and General-covered funds underperform, with a performance difference of about 11% annually. This result suggests a content bias, consistent with fund managers presenting conservative, pessimistic forecasts, while reporters present relatively more optimistic views. However, investor fund flow does not react to this information, which suggests that investors do not seem to exploit valuable information embedded in media coverage.
Type :
Working Paper
Dates :
Créé le 31 janvier 2011
Complément d'informations :
For more information, please contact Joanne Finlay, EDHEC Research and Development Department [ joanne.finlay@edhec.edu ]

The contents of this paper do not necessarily reflect the opinions of EDHEC Business School.

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