The power of bad: The negativity bias in Australian consumer sentiment announcements on stock returns

Akhtar, Shumi; Faff, Robert W.; Oliver, Barry; Subrahmanyam, Avanidhar

doi:10.1016/j.jbankfin.2010.10.014

Cited by 122 publications

(85 citation statements)

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“…Second, and in a similar vein, framing research has empirically documented a negativity bias in several contexts (Soroka 2006). These framing studies show that negative (vs. positive) valenced framing exerts disproportional strong effects on public perception and behavior, as negative information carries more value compared to positive information (Akhtar et al 2011;Fang and Peress 2009;Tetlock 2007;Tetlock, Saar-Tsechansky, and Macskassy 2008;Van der Meer and Vliegenthart 2017). Overall, people are wired to watch out for threats and respond stronger to negative stimuli with greater attention and stronger emotional responses (Knobloch-Westerwick, Mothes, and Polavin 2017).…”

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confidence: 93%

Mediatization and the Disproportionate Attention to Negative News

et al. 2018

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Do news media increasingly portray a distorted world image when reporting menace? The purpose of this study is to investigate how media attention for negative incidents evolves over time and how this relates to real-world trends and public responses. A longitudinal content analysis of media coverage of aviation incidents is used to provide a systematic investigation into the trends of media attention related to real-world data. Results show that while the total number of aviation incidents declined across time, relative media attention increased. Time series analysis revealed that media attention for these negative incidents was negatively associated with shifts in public responses-i.e. air travel behavior-whereas real-world statistics on aviation incidents did not seem to explain variation in public behavior. Moreover, when exploring the variation in the coverage of media attention, increasing presence of mediatization facets was observed as a potential explanation for the over-time rise in disproportional attention to negative news. In conclusion, news media may have a blind spot for progression and a distorted media reality can be a predictor of public responses instead of reality itself. KEYWORDS mediatization; negative news; news media logics; public responses; time series analysis IntroductionNews media are often accused of creating a distorted reality (e.g. Kitzinger 1999). First, in their reportage, media are frequently skewed toward the negative side if it comes to selecting news items (Hester and Gibson 2003). The journalistic tendency to focus on negative news is repeatedly considered an outcome of routine selection procedures of those stories that are believed to garner the highest ratings (e.g. Altheide 1997; Lawrence and Mueller 2003). Second, infrequent and isolated incidents have become part of the daily-news reportage, turning these rare events into the common world image (Altheide 1997;Park et al. 2009). As news develops a life of its own, one can observe discrepancies between what actually happens in the world and how the media portray it. Consequently, this research is broadly concerned with the role of the news media in processes of social construction and amplification of low-probability highconsequence negative incidents.Journalism Studies, 2019 Vol. 20, No. 6, 783-803, https This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/ 4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way.Scholars have argued that, as a consequence of increased commercial pressures on news media institutions, media's penchant for the negative and the exceptional has become more prominent over time (e.g. Farnsworth and Robert Lichter 2006;Semetko and Schoenbach 2003) Indeed, it has been argued that factors such as negativity have grown to become among t...

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confidence: 93%

Mediatization and the Disproportionate Attention to Negative News

et al. 2018

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“…Research indicates that consumer sentiment has valuable information. Further, they document the "negativity effect" in which, upon announcement of bad sentiment news, the equity market experiences a signifi cant negative announcement day effect (Akhtar et al 2011 ).…”

Section: Effects Of Mediamentioning

confidence: 94%

Media and Consumer Economic Wellbeing

Xiao

2015

Consumer Economic Wellbeing

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“…Since the seminal paper of DeLong et al (1990), which defines 'noise trader sentiment' as the component of expectations about asset returns not warranted by fundamentals, many papers have been written on how to measure investor sentiment 5 and recently consumer confidence indices have started to be used as a proxy for it (e.g., Lemmon and Portniaguina, 2006;Kalotay et al, 2007;Barsky and Sims, 2012;Ho and Hung, 2009;Schmeling, 2009;Akhtar et al, 2011Akhtar et al, , 2012Hsu et al, 2011;Yu and Yan, 2011;Stambaugh et al, 2012;Zouaoui et al, 2011;Bathia andBredin, 2013 Coakley et al, 2013 DeLong et al (1990) postulate for investor sentiment, may be a more suitable approach.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

“…Indeed, academic research confirms that consumer confidence indices (CCIs) have predictive power (Acemoglu and Scott, 1994;Carroll et al, 1994;Bram and Ludvigson, 1998). More recently, consumer confidence indices have also found their way into financial research where they have started to be used as a direct proxy for investor sentiment (Qiu and Welch, 2006;Kalotay et al, 2007;Akhtar et al, 2011Akhtar et al, , 2012Zouaoui et al, 2011;Bathia and Bredin, 2013;Coakley et al, 2013). This may be somewhat puzzling because while consumer confidence, and therefore indices measuring it, can be expected to be shaped by market fundamentals (Acemoglu and Scott, 1994;Poterba, 2000), investor sentiment, at least in the sense of DeLong et al (1990), represents the irrational part of the price creation process.…”

Section: Introductionmentioning

confidence: 99%

“…This is somewhat surprising given that the financial situation at a household level may depend both on economic conditions (e.g., employment prospects), and future stock market returns (if households invest in equity directly, or indirectly via retirement schemes). More recently, however, several papers analysing the short-term impact of CCIs on stock markets have been published (e.g., Kalotay et al, 2007;Ho and Hung, 2009;Akhtar et al, 2011Akhtar et al, , 2012Hsu et al, 2011). These papers are, in fact, interested in testing the impact of investor sentiment on stock market movements, however, by using CCIs as a direct proxy for investor sentiment they implicitly test for the explanatory power of CCIs on stock market movements.…”

Section: Introductionmentioning

confidence: 99%

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Consumer confidence indices and stock markets' meltdowns

Ferrer

Salaber²,

Zalewska

2014

The European Journal of Finance

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Consumer confidence indices (CCIs) are a closely monitored barometer of countries' economic health, and an informative forecasting tool. Using European and US data, we provide a case study of the two recent stock market meltdowns (the post-dotcom bubble correction of 2000-2002 and the 2007-2009 decline at the beginning of the financial crisis) to contribute to the discussion on their appropriateness as proxies for stock markets' investor sentiment. Investor sentiment should positively covary with stock market movements (DeLong et al., 1990), however, we find that the CCI-stock market relationship is not universally positive. We also do not find support for the information effect documented in previous literature, but identify a more subtle relationship between consumer expectations about future household finances and stock market fluctuations.

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The power of bad: The negativity bias in Australian consumer sentiment announcements on stock returns

Cited by 122 publications

References 43 publications

Mediatization and the Disproportionate Attention to Negative News

Mediatization and the Disproportionate Attention to Negative News

Media and Consumer Economic Wellbeing

Consumer confidence indices and stock markets' meltdowns

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