CNN Effect

AAA

DEFINITION of 'CNN Effect'

A theory that seeks to explain the effect that 24-hour news networks, such as CNN, have on the general political and economic climate. Because media outlets provide ongoing coverage of a particular event or subject matter, the attention of viewers is narrowly focused for potentially prolonged periods of time. The CNN effect can therefore cause individuals and organizations to react more aggressively towards the subject matter being examined. For example, regular coverage of turmoil in the banking sector may result in the Federal Reserve taking the necessary action to minimize any potential detrimental effects.

INVESTOPEDIA EXPLAINS 'CNN Effect'

The effect that media outlets have on consumer behavior has been examined since the CNN effect came to prominence during the 1980s. For example, by focusing on natural disasters, news outlets may influence consumers and investors to react more drastically to what is unfolding. While this can be viewed as a criticism, media outlets also shed light on the inner workings of governments and businesses, which may increase accountability.

RELATED TERMS
  1. Material News

    News released by a company that might affect the value of its ...
  2. Revenue

    The amount of money that a company actually receives during a ...
  3. Common Shareholder

    An individual, business or institution that holds common shares ...
  4. Commodity Futures Trading Commission ...

    An independent U.S. federal agency established by the Commodity ...
  5. Political Risk

    The risk that an investment's returns could suffer as a result ...
  6. Mobile First Strategy

    Mobile first strategy is trend in website development where designing ...
RELATED FAQS
  1. Why do stock prices change following news reports?

    Stock prices move up and down every minute due to fluctuations in supply and demand. If more people want to buy a particular ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Can Good News Be A Signal To Sell?

    Sometimes positive announcements can mean bad news for a stock. Find out why.
  2. Forex Education

    Trading The Non-Farm Payroll Report

    Discover how to trade the NFP report without getting knocked out by the irrational volatility it can create.
  3. Forex Education

    How To Trade Forex On News Releases

    When economic data comes out, it can have a marked impact on the currency market. Find out how to profit.
  4. Credit & Loans

    How Interest Rate Cuts Affect Consumers

    Traders rejoice when the Fed drops the rate, but is it good news for all? Find out here.
  5. Economics

    Financial Media 4-1-1 For Investors

    Cut through the information clutter and decipher the useful news from the useless.
  6. Professionals

    What is a Corporation?

    A corporation is an organization—usually a large business—with specific characteristics.
  7. Stock Analysis

    Did J.C. Penney’s Turnaround Plan Work Out?

    J.C. Penney has wrapped up another year of its turnaround plan: ultimately, to make money in a stock, the underlying business has to make money, too.
  8. Stock Analysis

    How Can Broadcom Grow Its Connectivity Business?

    At a recent investor conference, Broadcom CEO Scott McGregor talked about the company's wireless connectivity business.
  9. Stock Analysis

    How CVS Grew Into a Drugstore Giant

    Want proof that brick-and-mortar businesses aren't dead? Just look at this company.
  10. Investing

    Corporate Governance

    Corporate governance refers to the formally established guidelines that determine how a company is run. The company’s board of directors approves and periodically reviews the guidelines, which ...

You May Also Like

Hot Definitions
  1. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center