Investor Sentiment and Central Bank Communication
This paper aims to test the impact of of Fed chair's overconfidence on investor sentiment. We first use a media-based proxy to compute a measure of Fed chair's overconfidence for the period 1999M01-2018M08, the overconfidence indicator. We relate this variable to investor sentiment. Our results show that an overconfident Fed chair is associated with higher investor sentiment. Further extension shows that a negative change of Fed Chair's overconfidence has a higher impact on investor sentiment than a positive change, thus providing additional evidences of the \enquote{negativity} effect of news on investor's attitude