News Credibility and Influence within the Financial Markets

Zhen YU, Michael D. WANG, Xiangdong WEI, Jie LOU

Research output: Journal PublicationsJournal Article (refereed)peer-review

1 Citation (Scopus)


How does information credibility, a subjective judgment of investors, affect empirical asset pricing in financial markets? Traditional economic theories are inadequate for interpreting market responses driven by people’s subjective thinking, as these cognitive processes are not encompassed by the concept of utility. We explore these effects by using computational linguistics and deep structured learning algorithms to analyze financial newspapers and social media posts. After controlling for factors related to content and market momentum in our narrative based credibility indicator, we find that news credibility is positively correlated with the returns on assets preferred by experts and negatively correlated with assets preferred by gamblers. Based on this finding, we point out that the efficient-market hypothesis (EMH) is not appropriate in the dominant market of gamblers in the short-term. In the long-term, however, investment motivation does not significantly affect the validity of the hypothesis.
Original languageEnglish
Pages (from-to)238-257
Number of pages20
JournalJournal of Behavioral Finance
Issue number2
Early online date9 Sept 2021
Publication statusPublished - Apr 2023

Bibliographical note

Funding Information:
This work was supported by a grant from National Social Science Fund Youth Project of China (No. 20CJY014): “Study on the Impact of Industrial Structure Upgrading on the Employment Quality of Floating Population and its Countermeasures.” I am grateful to C. Simon Fan, Hongliang Zhang and Fuhai Hong for helpful comments and suggestions. Thanks also to Joint PhD Workshop with Zhejiang University holding at Lingnan University for their feedback and suggestions.

Publisher Copyright:
© 2021 The Author(s). Published with license by Taylor & Francis Group, LLC.


  • Behavioral finance
  • Cryptocurrency valuation
  • Media
  • News

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