The manner in which financial markets incorporate information is a function of the positioning of information as well as whether or not its current, according to research reported in the Harvard Business Review by Ph.D. candidate Anastassia Fedyk.

Fedyk argues that, while freely available information lays the foundation for “efficient and transparent markets”, putting news in the public domain doesn’t necessarily insure that it will be reflected in stock prices. She found, for example, that news articles placed on the front page or at the top of news websites as well as those about better-known companies get more reads. While this may seem obvious, Fedyk says that it “challenges the idea that financial markets absorb all news equally, based on financial relevance.”

The situation, she believes, stems from human psychology. That is, people have difficulty focusing their attention on relevant information when they are faced with “multiple competing cues.” Even financial professionals demonstrate a range of news consumption patterns. Fedyk says broker dealers and hedge funds are “much quicker, on average, to click on any given piece of news than banks or large investment management companies.” She found that this increased attention to news is more predictive of stock price moves and trading volumes than attention by other investors.

So, while delivering news to the public is extremely important, Fedyk concludes, so is the “sophisticated processing of the public information, especially given how quickly the news environment is changing.”