The influence of media on investment decisions.
Innovaciones de Negocios. 2014;22(11):297-311
Journal Title: Innovaciones de Negocios
ISSN: 2007-1191 (Print)
Publisher: Universidad Autónoma de Nuevo León
LCC Subject Category: Social Sciences: Industries. Land use. Labor: Management. Industrial management | Social Sciences: Commerce: Business
Country of publisher: Mexico
Language of fulltext: English, Spanish; Castilian
Full-text formats available: PDF
Joaquim M. Perramon Ayza
(Universitat de Barcelona)
Abstract | Full Text
We analyzed how information in the financial press influences investment decisions and the specific case of economic bubbles. We found considerable flaws in the information market due to several factors: demand, the predominance of what are termed “irrational investors” (herding), and supply, which has the problem that the sources of information are biased and feeds back. A financial bubble is a deviation between real value of a financial asset and its persistent market price in time, which also has a speculative origin fed back by the illusion of the owners of these financial values, who will take benefits because of the future prices, which must be higher than the previous ones. In this context, the economical information in the media is submitting three problems. First of all, it is information generated by companies. In second place, the information circuit is fed back. A problem of informative independence becomes created, particularly serious in the case of the banks, which are at the same time creditors. And in a third place, some informative biases are manifested for the companies of regulated sectors which are starring the economical information in the media.