The power of bad: the negativity bias in Australian consumer sentiment announcements on stock returns

S Akhtar, Robert Faff, B Oliver, A Subrahmanyam

Research output: Contribution to journalArticlepeer-review

58 Citations (Scopus)


This paper examines the equity market reaction to the monthly release of Australian consumer sentiment news. Our results indicate that consumer sentiment has valuable information content. Further, we document a version of the “negativity effect” (from the psychology literature) in which, upon announcement of bad (good) sentiment news, the equity market experiences a significant negative (no) announcement day effect. Notably, we find that the market recovers from the bad news shock relatively quickly post-announcement. The results are robust to a broad range of additional tests.
Original languageEnglish
Pages (from-to)1239-1249
Number of pages11
JournalJournal of Banking and Finance
Issue number5
Publication statusPublished - May 2011


  • investor sentiment
  • stock market returns
  • market efficiency

Cite this