Recently, the paper Narrative Ambiguity Matters, co-authored by Professor Zhang Qunzi from the School of Economics and Wei Xinbei, her 2024 PhD graduate who is currently a lecturer at Capital University of Economics and Business, has been officially published online in Management Science.

How to identify and characterize the deep-seated uncertainty that is hard to quantify in financial markets constitutes a critical issue for understanding investor behavior and asset price fluctuations. Starting from economic-news narratives, this study employs textual information to capture the ambiguity (Knightian uncertainty) faced by markets, and further investigates its impacts on financial markets. The research finds that uncertainty embedded within news narratives can effectively reflect investors’ perceptions and responses when confronted with unknown risks, and exhibits significant predictive power for future financial-market risks and asset returns. It offers new perspectives and empirical evidence for understanding how uncertainty shapes financial markets.

Zhang Qunzi is Professor and Associate Dean at the School of Economics, Shandong University. She is the principal investigator of the National Science Fund for Excellent Young Scholars of China, person-in-charge of a national-level first-class undergraduate course, Shandong Provincial High-end Financial Talent, and Distinguished Young and Middle-aged Scholar of Shandong University. Her research outputs have appeared in domestic and international journals including Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Management Science, Journal of Financial Research, and Accounting Research.

Link to the original article: https://pubsonline.informs.org/doi/10.1287/mnsc.2025.02735