Rumors can be a means of social control to help some individuals, a group, an organization or an institution to achieve a certain objective. In this case, a rumor can be an instrument of various groups, business organizations, political parties and other institutions to fight in order to achieve the interests. Thus, rumor has an instrumental purpose. It can become an effective means of control of social groups and social behavior as well as a means of support to a group’s identity and stability (Valdas, 2009). They also give a sense of control for traders in unpredictable financial markets.
“It’s really just a combination of illiquidity, the usual rumors about some firm on the verge of collapse, and the holiday,” a trader at a Western securities company in Tokyo said. The rumors of hedge- fund trouble are “nothing that I can substantiate, just smoke and mirrors, but it sends people running for cover where they can. The market’s extremely illiquid and subject to wild swings on the thinnest of rumors (Arnold, 2008).”
“Rumors can be viewed as a substitute for news. When there is a lack of news in financial markets, future projections are created to fill in gaps of information. When these projections are communicated within the investing community, a rumor is born. This is the classic way in which rumors are created. (Schindler, 2007). For example, if a CEO says that their company is interested in merging with another, but does not designate with whom, rumors may develop. These substitutes for news will evolve and spread throughout the market if the information they provide is stimulating and of major importance. According to Schindler (2007), there are two ways in which rumors are analyzed by behavioral finance. One is at the individual level in which the procedure is taken to make an investment decision is analyzed. The other is the aggregate or market level which focuses on how irrational behaviors by investors lead to disproving the Efficient Market Hypothesis” (Karasidis, p.5).
Schindler (2007,) explained why financial markets are susceptible to rumors. All actions on the trading floors are based on news. Getting information is crucial in gaining profit for traders in financial markets. In the absence of real information about the market, traders often grab any improvised news or rumors to guide their trading decisions. Since time is of the essence and traders are always in pressure to make swift financial decisions, verifying the truthfulness of financial rumors proved to be difficult. Thus, traders tend to take rumors as news. Owing to the lack of time, their only concern is the reliability of the source of rumors and not for their content. Since they are under pressure to trade to earn a profit, traders oftentimes grab rumors as news. If he doesn’t trade, he loses money if the rumors turn out to be true (Schindler, 2005, 19).
A study by Werner and Murray (2004) confirmed the influence of rumors in the market. It showed that a positive rumor usually leads to a positive return on the following trading day, while a negative message leads to a negative return on the following trading day. Another study by Kiymaz (2001), examining good and bad rumors, also showed that good rumors on the market generate abnormal returns beginning four days before their publication, while the effect of negative rumors begins only after publication. Wysocki (1999) also found increasing returns and trade values the day following the rumor, especially when it is published at night while markets are closed.
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First of all, the meaning of colors in society is cultural. Color goes beyond appearance, but generates a cultural experience. It reminds one of his/her experience and social upbringing in society. It offers an instantaneous visual way to associate meaning to a particular individual, company or industry. People from various cultures give different meaning and interpretation to colors. And the color red is one of the primary colors which can have different meanings to individuals in society. In urban societies, red is a dominant and attention-grabbing color. Just look around and you will see red in people’s clothes, billboards, cars, buildings, logos, etc. Red is an energetic and vivid influence within the business and romantic world. In general, people associate many positive things to color red. Let us cite some few things in business where red is highly valuable and desirable.
Color Red in Business
Red is generally a “warm” color. “Red” holidays like Christmas and Valentine’s Day are often associated with warmth, love, and giving. Some entrepreneurs capitalize on the popularity of red to improve their sales and business. Coca Cola is the most popular and biggest-selling soft drink in history, as well as one of the most recognizable brands in the world and the color of its name and logo is red. Created in 1886 in Atlanta, Georgia, by Dr. John S. Pemberton, Coca-Cola was first offered as a fountain beverage at Jacob’s Pharmacy by mixing Coca-Cola syrup with carbonated water. Coca-Cola was patented in 1887, registered as a trademark in 1893. In 1899, Coca-Cola began franchised bottling operations in the United States and in 1906 bottling operations for Coca-Cola began to expand internationally.
There is a popular theory about color in China. China’s emperor has a theory of the five elements to select a color. The color green stands for wood, red stands for fire, yellow for earth, white for metal and black for water. And the color red symbolizes luck and happiness. Chinese people believe that red can be a sign of joy and fortune. That is why the Chinese New Year and other official or traditional holidays are full of red. Also, some older people or people that have been married usually give red envelopes as red is a sign of good luck.
The choice of color in business logos can speak a lot about the company’s brand. Close your eyes and think about the color of the name Coca Cola or Coke is black, would you think that the company will reach its prestige today had it not been red in color? Or if McDonald’s famous golden arches were had been gray? Would the burger chain be the international success it is today? Color is a key part of any brand. “Whether your logo is red and intense, yellow and joyful or black and mysterious, its colors are announcing something to the customer. Take note that red, maroon, yellow, and orange are hot colors. Thus, McDonald’s use yellow-gold for its arches since they are selling hot burgers and meals. Products that need heat or suggesting something sexy or romantic must use hot colors; thus, red is popular for Valentine’s day products such cards and ribbons. Blue, purple, and green are cool colors. Therefore, cool products such as drinks and refreshers or deodorant and related products must use cool colors to convey the nature of the firm’s goods. As a company creates the perfect logo, it must sure to pay attention to the color messages they’re sending.” Take a look at the following highly popular logos and you will notice that they mostly are in red:
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2. Entrepreneur, https://www.entrepreneur.com/article/232401.
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