News And Narratives

In the last chapter we discussed various aspects of information that affect the narrative. In this chapter, the professor has specifically discussed how corporate news affects the narrative.

The most important corporate event is obviously the earnings report. A company publishes results every quarter and the commentaries may change the narrative about the company. The following table summaries how corporate earnings influence narratives.

Apart from corporate earnings, other corporate news like acquisition or divestment of assets, financing, dividend policy changes are all going to affect the narrative about the company in one or the other way. This is the very reason why even long-term investors need to be vigilant about what is happening around them and hence actively follow news.

Another important news affecting the narrative and subsequently the value of a company are corporate governance stories like corporate scandal and misconduct. In Indian context, Manpasand Breweries, JP Associates, Café Coffee Day, Satyam are prominent examples of how corporate governance issues have influenced the narratives about the company and hence once a market’s favorite, turned out to be a nightmare overnight.