This paper studies the content of financial news as a function of past market returns. As a proxy for media content we use positive and negative word counts from general financial news columns from the Wall Street Journal and the New York Times. Our empirical analysis allows us to discriminate between theories that predict hyping good stock performance to those that emphasise negative news. The evidence is conclusive: negative market returns taint the ink of typewriters, while positive returns barely do. Given how pervasive our estimates are across multiple time periods, subject to different competitive pressures in the market for news, we interpret our results as driven by demand preferences of investors.
An award-winning researcher, Dr Garcia’s articles have been published by the Journal of Finance, Review of Financial Studies, Journal of Financial Economics and Journal of Economic Theory, among others.
The research of Diego Garcia includes work on informational economics, the financial media, behavioral finance and financial intermediation. Before joining UNC Kenan-Flagler, he taught at the Tuck School of Business at Dartmouth.
He received his PhD from the Haas School of Business and his master’s in statistics from the College of Letters and Science at the University of California, Berkeley. He received his BBA from the Asturias Business School in Spain. He teaches courses on derivatives and derivative securities.