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CEO Interviews on CNBC

Last Updated on 10 February, 2024 by Rejaul Karim

Embarking on an exploration of market dynamics and media’s sway, the research paper “CEO Interviews on CNBC” by Y. Han (Andy) Kim and Felix Meschke probes the impact of media attention on stock prices, focusing on the intriguing realm of individual investor trading.

With a spotlight on 6,937 CEO interviews on CNBC, the study unveils a notable cumulative abnormal stock return of 1.62% during the [-2, 0] trading day window, followed by a reversion of 1.08% over the subsequent ten days. This intricate dance of information dissemination reveals correlations tying the magnitude of price response to viewership and the linguistic tone of the CEO.

In this captivating narrative, individual investors and short sellers emerge as central figures, contributing to a fascinating exploration of information cascades triggered by CNBC interviews. The research, brimming with insights, illuminates the nuanced interplay between media, investor attention, and market efficiency.

Abstract Of Paper

We investigate whether media attention systematically affects stock prices through the trading of individual investors by exploiting the substantial discrepancy between perceived and actual information content of 6,937 CEO interviews on CNBC. The average cumulative abnormal stock return over the [-2, 0] trading day window is 1.62%, followed by reversion of 1.08% over the following ten trading days. The magnitude of price response is positively correlated with the viewership as well as the language tone of the CEO. Individual investors and short sellers are key drivers of the pricing pattern. We document evidence of information cascade coming from CNBC interviews.

Original paper – Download PDF

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Author

Y. Han (Andy) Kim
Sungkyunkwan University

Felix Meschke
University of Kansas – Finance Area

Conclusion

In conclusion, this investigation delves into the intricate relationship between media attention, particularly CEO interviews on CNBC, and its discernible impact on stock prices, primarily through the actions of individual investors.

The substantial gap between perceived and actual information content of these interviews reveals a noteworthy pattern. The cumulative abnormal stock return over the [-2, 0] trading day window stands at 1.62%, followed by a subsequent reversion of 1.08% over the ensuing ten trading days.

Crucially, the extent of price response correlates positively with both viewership and the language tone of the CEO, shedding light on influential factors. Notably, individual investors and short sellers emerge as pivotal drivers of this pricing phenomenon, emphasizing their role in shaping market dynamics.

Furthermore, the findings illuminate evidence of an information cascade stemming from CNBC interviews, underscoring the intricate interplay between media, investor attention, and market efficiency.

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FAQ

– What does the study reveal about the impact of CEO interviews on CNBC on stock prices, especially concerning individual investors?

The study uncovers a notable cumulative abnormal stock return of 1.62% during the [-2, 0] trading day window following CEO interviews on CNBC, with a subsequent reversion of 1.08% over the next ten trading days. The research emphasizes the influence of media attention, particularly through individual investors, in shaping stock prices. This suggests a discernible impact of CEO interviews on CNBC, showcasing a nuanced relationship between media exposure and market dynamics.

– What factors are correlated with the magnitude of price response to CEO interviews on CNBC, according to the findings?

The extent of price response is positively correlated with both viewership and the language tone of the CEO during interviews. This implies that the impact of CEO interviews on stock prices is influenced by the size of the audience exposed to the information and the linguistic tone employed by the CEO. These factors contribute to the complexity of information dissemination through media channels and its subsequent effect on market efficiency.

– How do individual investors and short sellers play a role in the pricing pattern observed in the aftermath of CEO interviews on CNBC?

Individual investors and short sellers emerge as key drivers of the pricing pattern observed following CEO interviews on CNBC. Their actions contribute significantly to the cumulative abnormal stock return and subsequent reversion. The study highlights their pivotal role in shaping market dynamics in response to media attention. Additionally, evidence of an information cascade originating from CNBC interviews underscores the broader impact of media interactions on market behavior.

You can find many more Research Papers here

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