Rumor Has It: Sensationalism in Financial Media

Kenneth R. Ahern, Denis Sosyura

Research output: Contribution to journalArticlepeer-review

104 Scopus citations


The media has an incentive to publish sensational news. We study how this incentive affects the accuracy of media coverage in the context of merger rumors. Using a novel dataset, we find that accuracy is predicted by a journalist's experience, specialized education, and industry expertise. Conversely, less accurate stories use ambiguous language and feature well-known firms with broad readership appeal. Investors do not fully account for the predictive power of these characteristics, leading to an initial target price overreaction and a subsequent reversal, consistent with limited attention. Overall, we provide novel evidence on the determinants of media accuracy and its effect on asset prices.

Original languageEnglish (US)
Pages (from-to)2050-2093
Number of pages44
JournalReview of Financial Studies
Issue number7
StatePublished - Jul 1 2015
Externally publishedYes


  • G14
  • G34
  • L82

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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