Headline Effect

AAA

DEFINITION of 'Headline Effect'

The effect that negative news in the popular press has on a corporation or an economy. Whether it is justified or not, the investing public's reaction to various headlines can be very dramatic. Many economists believe that negative news headlines make consumers more reluctant to spend money.

INVESTOPEDIA EXPLAINS 'Headline Effect'

An example of a headline effect is the media's extensive coverage of the impact of rising gas prices on consumers. Some economists believe that the more attention that is paid to small increases in the price of gasoline, the more likely it is that consumers will be more cautious about spending their discretionary dollars. The headline effect can be regarded as the difference between rationally justifiable decreases in discretionary spending and those that occur as the result of a newsworthy event.

RELATED TERMS
  1. Third-Party Technique

    A marketing strategy in which a company employs outside individuals ...
  2. Economics

    A social science that studies how individuals, governments, firms ...
  3. Behaviorist

    1. One who accepts or assumes the theory of behaviorism (behavioral ...
  4. Mental Accounting

    An economic concept established by economist Richard Thaler, ...
  5. Cockroach Theory

    A market theory that suggests that when a company reveals bad ...
  6. Calendar Effect

    A collection of assorted theories that assert that certain days, ...
RELATED FAQS
  1. What causes a significant move in the stock market?

    There is a nearly infinite number of factors that can cause the stock market to move significantly in one direction or another. ... Read Full Answer >>
  2. How can a social responsibility consulting firm benefit a business?

    Corporate social responsibility has become a very important part of contemporary business management. In fact, many large ... Read Full Answer >>
  3. Why would a company have a subsidiary in a different sector from its main source ...

    A company would have a subsidiary in a different sector from its main source of business if it is looking to increase its ... Read Full Answer >>
  4. How do the C-suite members work together to make a successful company?

    Corporate managers, typically chosen by a board of directors in large organizations, are ultimately responsible to stakeholders ... Read Full Answer >>
  5. What is the difference between CI (competitive intelligence) and competitive analysis?

    The difference between competitive intelligence and competitive analysis is that competitive intelligence refers to the understanding ... Read Full Answer >>
  6. Where can I find out about upcoming stock splits?

    A stock split is a corporate action decided by a corporation's board of directors, where the company increases its shares ... Read Full Answer >>
Related Articles
  1. 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.
  2. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  3. Professionals

    What is a Corporation?

    A corporation is an organization—usually a large business—with specific characteristics.
  4. 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.
  5. 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.
  6. Stock Analysis

    How CVS Grew Into a Drugstore Giant

    Want proof that brick-and-mortar businesses aren't dead? Just look at this company.
  7. 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 ...
  8. Stock Analysis

    How You Depend On Qualcomm Every Day

    You may not know it, but you probably depend on a Qualcomm product just about every day. Here's how.
  9. Investing News

    The Economics of Hulu, Netflix, Redbox and Blockbuster

    These on-demand entertainment giants have already changed the way we consume entertainment. Who is poised to win this race for eyeballs?
  10. Stock Analysis

    PepsiCo's $66B Global Snack And Drink Empire

    With 14 billion-dollar beverage brands, you'll be surprised to learn that most of PepsiCo's revenue derives from foods. Here's how that came to be.

You May Also Like

Hot Definitions
  1. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  2. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  4. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  5. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  6. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!