Demand for Stock Market News Magazines Influenced by DAX

The sales figures of German stock market news magazines depend on the state of the stock market. If the market shows an upward trend, sales figures rise, while a downward trend prompts a drop in sales.

This is the result of a joint study by the Otto Beisheim School of Management (WHU) in Vallendar and the Centre for European Economic Research (ZEW) in Mannheim. Researchers examined whether there is a statistically significant connection between the development of the German share index (DAX) and sales of the magazines "Börse online" and "Wirtschaftswoche".

The study shows that sales figures of the said magazines are indeed influenced by DAX developments. This influence is more visible in the special interest magazine, "Börse online" than in the business magazine, "Wirtschaftswoche". Sales figures of news magazines such as "Spiegel" or "Focus", however, remain unaffected by stock market developments.

The principle, "no news is good news" does not therefore apply to magazines which mainly focus on stock market developments. The sales of other magazines, however, do seem to reflect this principle. The so-called Prospect Theory may provide an explanation. According to this theory, private investors regard the profits made from stock market gains to be lower than the loss of benefit experienced following an equally high stock market loss. Investors therefore tend to sell off their profits too early, and hold onto their losses for too long. If the market shows a downward trend, investors keep their losses in order to prevent them from becoming a real loss, and wait for the market to recover. In a bear market scenario, investors will therefore make only minor changes to their stock portfolio, and so require less financial advice or stock exchange tips. As a result, there is only a small demand for stock market news and investors’ demand for stock market magazines is likely to be much lower in a bear market scenario than in a bull market scenario.

Contact

Prof. Dr Dirk Czarnitzki, Phone: +49(0)621/1235-194, E-mail: czarnitzki@zew.de