On November 24, 2017, Harm Schütt (LMU München) presented his current research topic „Competition in Financial News Markets and Trading Activity” at the WHU Research Seminar in Finance & Accounting.
How does news market competition aﬀect ﬁnancial news coverage and trading activity? The author proposes that competition leads ﬁnancial news outlets to target diﬀerent audiences with differing ﬁnancial sophistication and prior beliefs. As audience characteristics are not directly observable, he develops a probabilistic model to infer them from earnings announcement coverage and ﬁnd economically signiﬁcant diﬀerences. The author further proposes that heterogeneity in audiences exposed to an announcement reﬂects heterogeneity in interpretation of the earnings news and thus trading activity. He ﬁnds that higher dispersion in audience characteristics of announcement coverage is associated with higher trading volume and return volatility.