More companies than ever before are having their earnings covered by press agencies, leading to an increase in trading volume and liquidity, according to a new report.
In 2014 the Associated Press began using algorithms to write media articles about US public companies’ earnings announcements. Since then, AP’s coverage has increased from around 400 earnings report stories per quarter to nearly 5,000.
AP’s use of automation provided the focus for a new research report from Stanford’s Professor Elizabeth Blankespoor, the University of Washington’s Professor Ed deHaan, and Stanford PhD student Christina Zhu.
More than half (57 percent) of the companies now being covered by AP hadn’t previously received any coverage. The researchers say these companies have since seen their trading volume increase by 38 percent, on average.
Speaking exclusively to IR Magazine’s podcast, The Ticker, deHaan says: ‘These robotic articles can, in fact, impact the stock market… We find very compelling evidence that this does motivate trading and improve liquidity.’
For firms that aren’t used to the spotlight, this may be an unwelcome development. ‘Maybe not all the firms want the extra visibility,’ deHaan says. ‘Maybe they want a quieter life.’
AP’s robo-journalism articles combine information from company press releases, analyst reports and stock performance. Automated articles run with the following footnote: ‘This story was generated by Automated Insights.’
Listen to Ed deHaan’s complete interview in the latest episode of The Ticker. Click the play button below or download and subscribe in the Apple Store.
