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Abstract

I provide causal evidence that textual complexity affects investor and market behavior, using two complementary settings. First, examining field data with randomization from Seeking Alpha, I find that a standard-deviation increase in headline length (negativity) leads to 12%-fewer (2%-more) views. The effects are larger for less-sophisticated investors. Sec- ond, examining firm-earnings releases, I find a market effect by instrumenting title length with company-name length. A standard deviation increase in length leads to 5%-less- announcement turnover, 50-basis-points-tighter-intraday-price ranges, and 40-basis-points- return underreactions, correcting within one month.

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