A Theory of Financial Media

Goldman, Eitan; Martel, Jordan; Schneemeier, Jan

doi:10.2139/ssrn.3457591

Cited by 3 publications

(4 citation statements)

References 51 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In addition, Goldman et al. (2020) develop a theoretical model which predicts that journalists report corporate news selectively and media reporting induces managers to obfuscate firm announcements, especially bad news announcements because obfuscation could further reduce the chance that the journalist reports these news.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Further, managers may prefer to obfuscate a firm announcement through earnings management to reduce the chance that the media reports negative news (Goldman, et al. 2020). Therefore, it is likely that high media coverage induces managers to engage more in earnings management activities, which results in a positive relation between media coverage and earnings management.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Accordingly, firms may manage earnings to avoid announcing negative news or to achieve short‐term earnings goals when media coverage is high, as the negative consequences of unfavorable earnings will be magnified by excessive media reporting. It is also likely that when media coverage is high, managers tend to obfuscate firm announcements through earnings management to reduce the chance that the media reports negative news about the firm (Goldman et al., 2020). All of these imply a positive relation between media coverage and earnings management.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The monitoring role of the media: Evidence from earnings management

Chen

Cheng

et al. 2020

Business Fin & Account

View full text Add to dashboard Cite

In response to the recent debate on the media, this paper examines the effect of media coverage on firm earnings management. Even if prior studies (Dyck et al., 2010;Miller, 2006) have documented the media's role in detecting and deterring accounting fraud (or extreme earnings management), it is unclear ex ante whether the media amplifies or curbs less egregious earnings management. Our results show that media coverage is negatively associated with both accrual-based and real earnings management, suggesting that the media serves as an external monitor that curbs managers' opportunistic earnings management behaviors. Further analyses show that the effect of media coverage on earnings management is more pronounced when monitoring from auditors is weak and when the other information intermediaries are active. Overall, the findings suggest a monitoring role of the media in firm financial reporting practices.

show abstract

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The monitoring role of the media: Evidence from earnings management

Chen

Cheng

et al. 2020

Business Fin & Account

View full text Add to dashboard Cite

show abstract

“…Huang et al (2014) show that managers can use the tone of earnings announcements to convey biased signals to the market. Goldman et al (2019) argue that it is the task of journalists to "debias the announcement" to limit the exposure of readers to biased information. To that end, Tetlock (2007) and Tetlock et al (2008) provide evidence that negative financial press Information production by the financial press: A closer look articles convey information about negative capital market developments and lower subsequent firm performance beyond analyst recommendations or firm fundamentals.…”

Section: Measurement Of Information Productionmentioning

confidence: 99%

Essays on the Media’s Production and Dissemination Role: Evidence from Financial and Non-Financial Disclosure

Großkopf¹

View full text Add to dashboard Cite

literature about the link between stakeholder theory and non-financial disclosure.The following section presents the literature stream related to the financial press as an intermediary of financial information and the stream about the link between stakeholder theory and non-financial disclosure to define the terminology of each literature stream.Additionally, the section points out important gaps in the literature that the three empirical studies of this thesis aim to fill by answering the motivating questions. Financial press as an intermediary of financial informationBeaver (1998, p. 10) defines information intermediaries as "an industry whose factors of production include financial information and other types of data and whose product is analysis and interpretation". Investors can choose from a vast array of information intermediaries in capital markets such as analysts, proxy advisors, or the financial press, which offer different information related products (Healy and Palepu (2001)). Though just one among many information intermediaries, the financial press traditionally has the broadest and most diversified audience of all common information intermediaries. Prior literature mainly discriminates two sources of value creation for press articles: information dissemination and information production. Information disseminationThe financial press collects and rebroadcasts information about accounting events such as the publication of quarterly financial statements and makes this information available to their readers through the articles. This information can take various forms, such as earnings figures or quotes from firm executives. This task potentially saves transaction costs of information gathering on behalf of investors. Also, it creates common knowledge of the information among market participants (Dyck and Zingales (2003)). Part of the information gathering is the reduction of all information available to focus on key items such as performance measures, which also means that journalists only partly disseminate public information. The dissemination occurs via various news outlets either in the traditional print version or via the online version of the newspaper.There is ample evidence supporting the dissemination role of the financial press. For example, Peress (2014) examines the impact of press coverage using the exogenous reduction in coverage due to a sample of national newspaper strikes in several countries. His results show a significant decline in trading volume and volatility on strike days and strongly support the information dissemination role of the press. This evidence complements the results of Engelberg and Parsons (2011) for local trading markets and is consistent with media contributing to the speed of information diffusion into prices. Bushee et al. ( 2010) examine the financial press coverage around earnings announcements and find that higher press coverage is associated with lower bid-ask spreads and increased market depth. This result indicates that press coverage reduces information ...

show abstract

Friends at WSJ: Journalist Connection, News Tone, and Stock Returns

2018

SSRN Journal

View full text Add to dashboard Cite

A Theory of Financial Media

Cited by 3 publications

References 51 publications

The monitoring role of the media: Evidence from earnings management

The monitoring role of the media: Evidence from earnings management

Essays on the Media’s Production and Dissemination Role: Evidence from Financial and Non-Financial Disclosure

Friends at WSJ: Journalist Connection, News Tone, and Stock Returns

Contact Info

Product

Resources

About