1. Financial news and market panics in the age of high frequency trading algorithms
- Author
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Kleinnijenhuis, J., Schultz, F., Oegema, D., van Atteveldt, W.H., Communication Science, Network Institute, and Communication Choices, Content and Consequences (CCCC)
- Subjects
SDG 16 - Peace ,SDG 16 - Peace, Justice and Strong Institutions ,SDG 10 - Reduced Inequalities ,Justice and Strong Institutions - Abstract
Whether financial news may contribute to market panics is not an innocent question. A positive answer is easily used as a legitimation to limit the freedom of financial journalists. Long-term effects of news are moreover inconsistent with the Efficient Market Hypothesis (EMH), which maintains that new information gives immediately rise to a new equilibrium. The EMH is under discussion, however, as a result of the transformation of financial markets and of financial journalism due to new economic thoughts, new communication theories, high-frequency trading and high-frequency sentiment analysis. As a case study of a market panic we show the impact of US news, UK news and Dutch news on three Dutch banks during the financial crisis of 2007-9. To avoid market panics, financial journalists may strive for greater transparency, not only on asset prices and corporate philosophies, but also on network dependencies in the worldwide financial markets. © The Author(s) 2013.
- Published
- 2013
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