Abstract
The central role of the media for people’s minds and for capital markets has been analyzed by a broad range of literature, nourished from several strands of academic research. Applying a vector autoregression on a unique set of TV news, consumer sentiment and excess flows of mutual funds, I find evidence that daily TV news is reflected in consumer sentiment and that this reflection varies with the news topics. However, I uncover no evidence of an effect on viewers’ allocation decisions. Mutual fund investors seem to put their money neither where their newly won insights from TV news are, nor where their sentiment is. The findings are robust to different measures of the fund flows and an alternative indicator for the news sentiment. The results indicate a direction for further studies on a more micro level.
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