Gerard Hoberg

Financial media frequently report the predictions of institutional investors. Using texts of all Wall Street Journal articles from 1979-2020, we measure the intensity of institutional investors’ participation in news production (InstPred) for each industry. We show that InstPred (i) predicts more information production about firm fundamentals, (ii) boosts institutional trading on mispricing, and (iii) accelerates the correction of longer-term mispricing by up to 34% to 62%. Our results are reinforced by quasi-exogenous variation in industries' investor-WSJ connections. Overall, our study shows that crowd-sourcing institutional investor participation in news production improves the quality of the information environment in the long term

We examine the link between product life cycles and disclosure using a novel 4-stage text-based life cycle model and report two main results. Firms with peers having mature-stage products disclose more, consistent with collaborative disclosure across peers to deter entry and improve market stability. In addition to disclosing more, these firms also have higher profits, lower risk, and mention fewer disruption concerns. In contrast, the standard link between competition and less disclosure is significantly amplified when industry peers are in the product development stage of the life cycle, as product placements are not yet public and are important to conceal. Our product life cycle results are new to the literature, have large economic magnitudes, and are reinforced by a quasi natural experiment based on patent expirations.

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