Language Consistency and Stock Market Trading Volume

Jameson K. M. Watts

SAGE Open, 2020, vol. 10, issue 2, 2158244020919779

Abstract: An information-theoretic measure of language consistency is constructed from the text of 13 years of trade journal articles on the biotechnology industry. This measure is then related to the trading volume of a representative portfolio of biotechnology stocks. Findings indicate that language consistency and trading volume have a joint (positive) influence on each other over the long term; however, sharp drops in consistency are also predictive of transient spikes in trading volume. The significance of these findings is discussed in relation to modern theories of legitimation and the economics of surprise.

Keywords: cognitive legitimacy; natural language processing; language consistency; big data; stock market; trading volume (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:10:y:2020:i:2:p:2158244020919779

DOI: 10.1177/2158244020919779

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