In the two days preceding its courses award a 1

Captured from all sides and submerged information, the manager sees counted time and limited attention. A newspaper article may attract attention or awaken him some ideas on a company, sector, issue or gone unnoticed so far... This is not as long as it is mechanically raise a purchase or sale of its decision. This will be one of the elements of its decision-making, in contrast to other categories of investors, such as individuals, much more easily influenced. Two researchers from the European Institute of business administration (Insead), Lily Fang and Joel Peress, and Zhang Lu of the University of California Irvine studied the tendency of managers us to buy or sell shares in the mass media ("USA today", "wall street Journal", "new york times" and "Washington post") over a long period (1993-2002).

These professionals focus more on companies very present in these newspapers, and for their purchases for their sales. In any case, they would be better advised to not do so because it is a negative link between this tendency to treat the "media" values and the future performance of these managers.

The "local" bias

These results are consistent with the findings of other work to show that the shares of companies in the media have lower performance, 3 per year on average, those companies which are not present (see box below). Buy them therefore led to a decline in yields for investors. "The ability of managers to treat or not values very media is a feature stable and persistent behavior of these professionals, find researchers. Some interested thus predominantly in this type of companies, while others avoid them systematically.

If the handler should be wary of too media companies, it must also ensure the way their information is presented and processed by different newspapers, given their potential bias. Example Local American media (regional...) tend to cover a more positive news of a company which belongs to the same town or region a distant business... This kindness of the newspaper is even more pronounced that the local business is an important commercial advertiser. This may in part explain the tendency that have, including retail investors to invest mainly in societies which are close geographically (city, region...). Presented in a more favourable and positive light by the local media, these companies appear them as as good business to grasp.

Transient effect

Another difficulty, the tributary information continuously in the direction of the Manager. They distract, rightly or wrongly. Sometimes, these are unnecessary and disruptive noise. But not always, as when, for example, the officer of a corporation in portfolio is expressed in an interview. Researchers studied the effect of these on the course of the undertaking concerned. Thus, the same day where the boss gives its maintenance, in this case the NBCC chain, the course of his company progresses from 1.65 with a very sharp increase in the volumes of transactions. In the two days preceding its courses award a 1.86 gain, the market anticipates and bet in advance on this event. Only, in the majority of cases, no actual news is delivered to the financial community on this occasion, and within ten days after the action yields 2.8.

The stock market impact of this communication is thus transient. She attracts the attention and the interest of investors, and generates a pressure high buyer, despite a low information content. A "overreactions" current that can be used for its benefit Manager if, for example, it looks a good time to get rid of its titles in good conditions (progression of the title and good liquidity).

General opinion

The economic media do not inform only on business, they also reflect an atmosphere, a kind of view general and medium of the financial community, which the Manager must take into account in its investment decisions. Thus, Paul Tetlock of Harvard University has studied the impact on Wall Street of the topic very popular and emblematic of the Wall Street Journal, "abreast of the market" ("to market"), which summarizes the beliefs and sense of time of investors. When this chronicle contains many terms negative and distressing, the performance of us equity declines thereafter and volatility increases. Two interpretations can be drawn, according to the University: "Is this topic would reveal the feeling and deep opinion of the market before even that they are perfectly integrated in the course." Either it directly influences the attitude of investors the shares.