type="main" <title type="main">ABSTRACT</title> <p>We structurally estimate a model in which agents’ information processing biases can cause predictability in firms’ asset returns and investment inefficiencies. We generalize the neoclassical investment model by allowing for two biases—overconfidence and...</p>

We examine whether a simple quantitative measure of language can be used to predict individual firms' accounting earnings and stock returns. Our three main findings are: (1) the fraction of negative words in firm-specific news stories forecasts low firm earnings; (2) firms' stock prices briefly...

I quantitatively measure the interactions between the media and the stock market using daily content from a popular "Wall Street Journal" column. I find that high media pessimism predicts downward pressure on market prices followed by a reversion to fundamentals, and unusually high or low...