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Investor mood and demand for stocks: Evidence from popular TV series finales

Investor mood and demand for stocks: Evidence from popular TV series finales
Investor mood and demand for stocks: Evidence from popular TV series finales
In this paper I employ a novel discrete mood proxy to investigate the response of the U.S. stock market to exogenous daily variations in investor mood. Drawing upon the psychology and communication literature, which documents that the end of popular TV series causes negative emotional reactions in large numbers of television viewers, I employ major TV series finales (between 1967 and 2012) as mood-altering events. I find that an increase in the fraction of Americans watching a TV show finale on a given day is immediately followed by a decrease in U.S. stock returns. This effect is stronger in small-cap and high-volatility stocks, whose pricing is more sensitive to sentiment, and is consistent with the hypothesis that negative mood reduces the demand for risky assets.
0167-4870
33-47
Lepori, Gabriele
551865b7-2e3a-4de1-aaf9-6c7f23e32e8d
Lepori, Gabriele
551865b7-2e3a-4de1-aaf9-6c7f23e32e8d

Lepori, Gabriele (2015) Investor mood and demand for stocks: Evidence from popular TV series finales. Journal of Economic Psychology, 48, 33-47. (doi:10.1016/j.joep.2015.02.003).

Record type: Article

Abstract

In this paper I employ a novel discrete mood proxy to investigate the response of the U.S. stock market to exogenous daily variations in investor mood. Drawing upon the psychology and communication literature, which documents that the end of popular TV series causes negative emotional reactions in large numbers of television viewers, I employ major TV series finales (between 1967 and 2012) as mood-altering events. I find that an increase in the fraction of Americans watching a TV show finale on a given day is immediately followed by a decrease in U.S. stock returns. This effect is stronger in small-cap and high-volatility stocks, whose pricing is more sensitive to sentiment, and is consistent with the hypothesis that negative mood reduces the demand for risky assets.

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Accepted/In Press date: 6 February 2015
e-pub ahead of print date: 14 February 2015
Published date: June 2015

Identifiers

Local EPrints ID: 434666
URI: http://eprints.soton.ac.uk/id/eprint/434666
ISSN: 0167-4870
PURE UUID: 2783e038-63af-49e8-89d7-f3c5893a051d
ORCID for Gabriele Lepori: ORCID iD orcid.org/0000-0002-2619-227X

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Date deposited: 04 Oct 2019 16:30
Last modified: 08 Jan 2022 03:40

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