Mirror or Molder? A Study of Media Coverage, Stock Prices, and Trading Volumes in Germany

Abstract

This article investigates the short-term relationship between media coverage, stock prices, and trading volumes of eight listed German companies. A content analysis of news reports about the selected companies and a secondary analysis of the daily changes in closing prices and the trading volumes of these companies were combined in a time-series design. After ARIMA-modeling each of them, the results suggest that media coverage rather reflects than shapes the development at stock exchanges from a short-term perspective (2 months). There were almost no hints for a widespread media effect, that is, an impact on so many investors that it will result in a measurable change in stock prices or trading volumes. Finally, theoretical and methodological consequences for exploring widespread media effects are discussed. © 2011 International Communication Association.