Extreme negative events adversely influence people's sentiment and induce pessimism in risk assessments in unrelated domains. Motivated by this finding, we examine whether managers of firms located in close proximity to terrorist attacks and mass shootings become more pessimistic and choose more...

This paper sheds empirical light on whether sentiment affects the profitability of price momentum strategies. We hypothesize that news that contradicts investors' sentiment causes cognitive dissonance, which slows the diffusion of signals that oppose the direction of sentiment. This phenomenon...