Modifier words in the financial press and investor expectations

We experimentally investigate how the content presented by the news media affects investor expectations and beliefs. We ask subjects to estimate the future stock price for twelve real (anonymous) listed companies. They received information about historical stock prices and extracts from real newspaper articles. The relative content discussed in the newspaper articles was manipulated, while keeping the absolute content unchanged. We found that subjects were more likely to expect higher (lower) future stock prices, be optimistic (pessimistic) about the economy and the potential of a stock, to perceive stock markets as more safe (risky), and to decide to buy (sell) stocks after reading positively (negatively) framed news