Download This PaperPolitical Polarization in Financial News
51 Pages Posted: 24 Feb 2020 Last revised: 16 May 2023
Date Written: May 11, 2023
Abstract
Comparing coverage of the same corporate financial news by the conservative Wall Street Journal and the liberal New York Times, we find strong evidence of political polarization in their reporting on both the intensive and extensive margins of coverage. We show that this politics-induced disagreement in corporate financial news leads to an increase in abnormal trading volume for the most politically extreme firms. Our results highlight a new source of investor disagreement, arising out of polarized reporting of corporate financial news, that generates trade among investors.
Keywords: Media bias, Financial news, Finance and politics, Textual analysis, Trading volume, Individual investors
JEL Classification: G30, G12, G14, D72
Suggested Citation: Suggested Citation
Eitan Goldman
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-856-0749 (Phone)
European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium
Nandini Gupta (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3416 (Phone)
812-855-5875 (Fax)