Fake news in business journalism affects trust

Research by Yale University and Massachusetts Institute of Technology faculty shows that fake news about companies affects trust about business journalism.

Marinna Neisnner of Yale Insights writes, “The team then tried to determine the source of the fake news. Deceptive articles about small and mid-sized firms were more likely to appear around the same time as press releases from those companies, and insider trading activity increased shortly after the articles were published. The results suggest that employees had attempted to manipulate stock prices. No such link was seen for large firms, suggesting that individual investors had written the fake news articles about large firms.

“Finally, the researchers studied how fake articles affected public trust. They monitored abnormal trading volume during the six months before the fake articles on Seeking Alpha were exposed and six months afterward. During the latter time period, trading activity following real articles dropped. Readers ‘seem to be more cautious,’ Niessner says.

“The study suggests that fake news comes with a large cost not just for financial markets but for society in general. A lack of trust in real news ‘is a big problem,’ she says. ‘Exchange of information is very important.'”

Read more here.