What is ‘Headline Effect’
The effect that negative news in the popular press has on a corporation or an economy. Whether it is justified or not, the investing public’s reaction to various headlines can be very dramatic. Many economists believe that negative news headlines make consumers more reluctant to spend money.
Explaining ‘Headline Effect’
An example of a headline effect is the media’s extensive coverage of the impact of rising gas prices on consumers. Some economists believe that the more attention that is paid to small increases in the price of gasoline, the more likely it is that consumers will be more cautious about spending their discretionary dollars. The headline effect can be regarded as the difference between rationally justifiable decreases in discretionary spending and those that occur as the result of a newsworthy event.
Further Reading
- Stock price reaction to news and no-news: drift and reversal after headlines – www.sciencedirect.com [PDF]
- Opportunistic disclosure in press release headlines – www.tandfonline.com [PDF]
- Are oil price news headlines statistically and economically significant for investors? – www.tandfonline.com [PDF]
- Analysis of the effect of Headline News in financial market through text categorisation – www.inderscienceonline.com [PDF]
- Public information arrival and volatility persistence in financial markets – www.tandfonline.com [PDF]
- Headline salience, managerial opportunism, and over-and underreactions to earnings – meridian.allenpress.com [PDF]
- Catering to investors through security design: Headline rate and complexity – academic.oup.com [PDF]
- The effect of macroeconomic news on stock returns: New evidence from newspaper coverage – www.sciencedirect.com [PDF]
