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What Drives Stocks during the Corona-Crash? News Attention vs. Rational Expectation

Faculty of Business and Economics, TU Dortmund University, Chair of Finance, Otto-Hahn-Str. 6, 44227 Dortmund, Germany
Author to whom correspondence should be addressed.
These authors contributed equally to this work.
Sustainability 2020, 12(12), 5014;
Received: 28 April 2020 / Revised: 15 June 2020 / Accepted: 17 June 2020 / Published: 19 June 2020
(This article belongs to the Special Issue The Influence of Covid-19 on Sustainable Economy)
We explore if the corona-crash 2020 was driven by news attention or rational expectations about the pandemic’s economic impact. Using a sample of 64 national stock markets covering 94% of the world’s GDP, we find the stock markets’ decline to be mainly associated with higher news attention and less with rational expectation. We estimate the economic cost from the news hype to amount to USD 3.5 trillion for the US and USD 200 billion on average for the rest of the G8 countries. View Full-Text
Keywords: corona-crash; news attention; investor expectation corona-crash; news attention; investor expectation
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Engelhardt, N.; Krause, M.; Neukirchen, D.; Posch, P. What Drives Stocks during the Corona-Crash? News Attention vs. Rational Expectation. Sustainability 2020, 12, 5014.

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