headline risk

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Headline Risk

The risk that a company may decline in share price because of negative news coverage. For example, rumors that a company's earnings are declining may cause shareholders to sell their stock. Even if the news itself is not true, headline risk can cause significant volatility for the stock in the short-term. For this reason, companies often price out the news by slowly leaking information before it is announced to minimize surprises and reduce the power of false rumors. See also: CNN effect.

headline risk

The possibility a negative news story will spread to other media outlets and cause a significant change in the value of an investment. For example, an unconfirmed report of a corporate management shakeup might be picked up by competing newspapers and television networks, thus causing a sharp decline in the company's stock price. The firm's stock price is likely to be subject to substantial volatility even though the story eventually proves false.
References in periodicals archive ?
But for many audit committees today, these headline risks are also driving a slower-moving--yet critically important--trend potentially impacting the audit committee's effectiveness: agenda overload.
A report released by Scott Wren, senior equity strategist at Wells Fargo Advisors, said that headline risks are the type of risks that investors should be aware of.
We need to be cognisant of the fact that high gasoline prices and headline risks can put a damper on consumer confidence and consumer spending.
Although further headline risks on Cyprus and the Eurozone cannot be ruled out in the near term, risk reward for buying long end bonds has turned attractive at these levels, as witnessed by the return of some real money interest in buying the 15y bond triggered by 7.
With the IMF visit pushed back to May, there are few positive headline risks in the pipeline in the very short term.
Gold's recent move is apparently tied to investors cashing in to offset declines in riskier assets, while industrial metals such as copper are closely linked to headline risks from Europe, which is a major market for China," Niimura said.
Libyan oil is likely to be lost to the market for an extended period, tying up considerable amounts of replacement oil in much longer supply chains, and events in Nigeria, Iraq, Iran and Bahrain are likely to provide a continuing backdrop of headline risks," they said.
We are pleased to be able to offer our customers the best-of-breed data, content, and tools they need to monitor both the credit and headline risks inherent in structured-finance deals.
Besides community banks with smaller capital bases and weaker financial profiles, some deposit-taking subsidiaries of foreign banks could also face deposit outflow pressure in accounts exceeding the $250,000 limit if parent banks face heavy economic, financial, or headline risks in their home markets.
The most interesting note, however, came from London-based equity researchers for Japanese financial conglomerate Nomura, which downgraded the bank one notch, to neutral, saying "in the face of these headline risks, it is difficult for us to recommend investors buy the stock.
Over half of companies had at least one 'near miss'; * One in three companies suffered significant damage as a result of failure to manage risk; * The amount of time boards are spending on risk management has risen four-fold in the past three years; * Boards are now assessing a wider range of risks in the light of corporate scandals and regulatory intervention, but they are ignoring other headline risks such as terrorism and the weather; and * Despite recent terrorist attacks, less than half of companies are reassessing their risk management strategies.
Middle and back office operations are being more closely scrutinized as investors expect sound operational practices that minimize investment and headline risks.