Co-authors: Marcela Valenzuela, Ilknur Zer
Affiliation: FEN UChile
Date and time: Tuesday, July 21, 2026 14:00 (Santiago, GMT-04:00)
Location (Hybrid Seminar):

• Sala Constitución at the Central Bank of Chile, Morandé 115, second floor.
• Online meeting

Registration: seminarios@bcentral.cl

Abstract:  Is more news always good news? We examine how fluctuations in the intensity of news coverage–termed news cycles impact trading and stock markets. Using a century-long dataset of financial news from The New York Times and stock-level returns since 1926, we show that the effect of news on returns is nonlinear and governed by the state of the news environment: while moderate news improves price efficiency, periods of excessively intense coverage predicts higher future returns and lower trading activity. These effects are strongest for retail-dominated stocks, consistent with limits to information-processing capacity. Our findings suggest that investors’ cognitive performance deteriorates under information overload, leading to temporary mispricing and impaired market efficiency, and bridge insights from cognitive science, neuroscience, and financial economics