Title: Hot Stocks and Cold Comfort
Description: I use computer-assisted textual content analysis to detect systematic reporting bias in financial news articles from 1985-2008 in the U.S., France, and Hong Kong in order to discern whether such biases contribute to country-level differences in household participation in equity markets. Today about 50% of American households hold stock (or equity) directly or indirectly in publicly traded corporations, while only 24% of French households and 36% Hong Kong adults do so. Publications analyzed include: in the U.S. the Wall Street Journal and the business section of The New York Times; in France Le Monde, Le Figaro, and Les Echos; and in Hong Kong the Standard and the South China Morning Post. The content analysis revealed consistent, country-level differences in how newspapers report financial news. These differences corresponded not with the overall level, but with the rate of growth in household equity market participation from one country to the next. In Hong Kong, where household equity market participation grew 171% from 1992-2004, financial news sources followed consistent patterns that, taken together, could be described as pro-business.

In contrast in France, where ownership grew by just 2.5% over the same time period, news sources were the least pro-business. In the U.S., where ownership grew 37% from 1992-2004, news sources fell somewhere in the middle in terms of pro-business language. By "pro-business, "I mean that Hong Kong newspapers used the most positive, the fewest negative, the most investment-related, and the fewest scandal words, while French publications used the fewest positive, the most negative, the fewest investment-related, and the most scandal-oriented words. While word use fluctuated with time, and with equity markets, country-level differences withstood these changes. Country-level differences also withstood left-right bias within countries. In other words, a left-leaning French publication looked much more like a right-leaning French publication than it looked like a left-leaning U.S. publication. Positive story bias does not, on its own, fully explain the extremely high level of American household stock ownership, but may help to explain the faster growth in stock ownership among Hong Kong citizens compared with those in the U.S., and the relatively slower growth of equity ownership in France from 1992-2004.