The few prior music sentiment papers have used post-2000 data and studied aggregate economic measures. This paper aims to explore how differences in demography and social economic status impact music sentiment’s relationship with financial economics. Further, this paper also investigates time trends of relations between music sentiment and financial economics by extending the sample period.
This paper mainly uses regression analysis to test the impact of music sentiment on both consumer sentiment and market returns. Rolling time-series regressions are used to investigate time trends in the consumer sentiment – music sentiment relation, and Fama–Macbeth cross-sectional regressions are used to explore how music sentiment prices cross-sectional expected stock returns.
This paper presents three novel results: (1) music sentiment has a differential impact across the consumption sentiment of age and income groups; (2) the impact of music sentiment displays significant time trends over a larger sample period; and (3) music sentiment is priced in the cross-section of expected stock returns, with meaningful correlation to the momentum factor.
By obtaining the weekly top 100 songs from the Billboard Hot 100 for an extended period of time, this paper highlights the multi-dimensional (demographic and temporal) considerations driving prior results regarding music sentiment.
