Consumer sentiment inequality, relative performance of firms, and the market
Abstract
This paper introduces Sentiment Inequality (SI)—the difference in sentiment between high- and low-income consumers—and demonstrates its predictive power for firm performance, asset prices, and market trends. Using the restaurant industry as a case study, we show that changes in SI predict the relative performance of high-end firms (casual dining restaurants) versus low-end firms (fast-food chains). These findings extend beyond the restaurant sector, revealing that SI predicts the relative performance of high- versus low-end firms across the entire market. SI emerges as a critical proxy for business cycle fluctuations, providing incremental informational value over aggregate sentiment measures and established predictors.
Fields of Study & Subjects
Economic Theory and Institutions
Publication details
- Journal / source
- Journal of Corporate Finance
- Publisher
- Elsevier BV
- Volume
- 99
- Pages
- 103004–103004
- Publication date
- 8 April 2026
- Language
- EN