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. Recession

    A significant decline in activity across the economy, lasting ...
  3. Behavioral Finance

    A field of finance that proposes psychology-based theories to ...
  4. Financial Porn

    A slang term used to describe sensationalist reports of financial ...
  5. Discretionary Income

    The amount of an individual's income that is left for spending, ...
  6. Mental Accounting

    An economic concept established by economist Richard Thaler, ...
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 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 >>
  3. 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 >>
  4. 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 >>
  5. Who owns Dow Jones & Company?

    Dow Jones & Company was acquired by News Corp. in 2007 from previous controlling owners the Bancroft family, who had ... 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. Professionals

    What is a Corporation?

    A corporation is an organization—usually a large business—with specific characteristics.
  3. 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.
  4. 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.
  5. Stock Analysis

    How CVS Grew Into a Drugstore Giant

    Want proof that brick-and-mortar businesses aren't dead? Just look at this company.
  6. 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 ...
  7. 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.
  8. 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?
  9. 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.
  10. Stock Analysis

    Why Cisco Systems Is Virtually Unavoidable

    Chances are you've used a Cisco Systems product today and you don't even know it. Here's how.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center