The Information Role of the Media in Earnings News

Guest, Nicholas M.

doi:10.1111/1475-679x.12349

Cited by 78 publications

(29 citation statements)

References 92 publications

(182 reference statements)

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Section: Price Reactions To Forecast Revisions: Baseline Resultsmentioning

confidence: 99%

“…In column 1, we include all control variables and their interactions with REVISION . In column 2, we follow Guest [2021] and Gipper, Leuz, and Maffett [2020] and include additional interactions of fixed‐effects indicators with REVISION . The key variables of interest are REVISION × Face Factors , which captures the modulating role of face factors on price responsiveness, incremental to the effect of other variables, including measurable skills.…”

Section: Capital Market Outcomesmentioning

confidence: 99%

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Face Value: Trait Impressions, Performance Characteristics, and Market Outcomes for Financial Analysts

Peng

Teoh

Wang

et al. 2022

J of Accounting Research

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Using machine learning–based algorithms, we measure key impressions about sell‐side analysts using their LinkedIn photos. We find that impressions of analysts’ trustworthiness (TRUST) and dominance (DOM) are positively associated with forecast accuracy, especially after recent in‐person meetings between analysts and firm managers. High TRUST also enhances stock return sensitivity to forecast revisions, especially for stocks with high institutional ownership. In contrast, the impression of analysts’ attractiveness (ATTRACT) is only positively associated with accuracy for new analysts or when a firm has a new CEO or CFO. Furthermore, while high DOM helps male analysts’ chances of attaining All‐Star status, it reduces female analysts’ accuracy and the likelihood of winning the All‐Star award. In addition, the relation between TRUST and accuracy is modulated by the disclosure environment and is attenuated by Regulation Fair Disclosure. Our results suggest that face impressions influence analysts’ access to information and the perceived credibility of their reports.

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Section: Price Reactions To Forecast Revisions: Baseline Resultsmentioning

confidence: 99%

Section: Capital Market Outcomesmentioning

confidence: 99%

Face Value: Trait Impressions, Performance Characteristics, and Market Outcomes for Financial Analysts

Peng

Teoh

Wang

et al. 2022

J of Accounting Research

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“…Given that most media coverage in my sample is from DJ Newswires, I only use the third restructuring event. As shown in panel B of was typically laid off, while the redundant WSJ reporter kept his or her position (Guest 2021). Thus, the news coverage change was mainly due to the integration of the newsrooms in Dow Jones.…”

Section: Evidence From Dow Jones 2013 Restructuringmentioning

confidence: 99%

“…Drake et al (2014), for example, find that media coverage mitigates the mispricing of cash flows through the wide dissemination of earnings news. Guest (2021) finds that Wall Street Journal (WSJ) journalists provide editorial content that helps investors interpret firms' disclosed earnings news. These studies mainly address how media coverage affects post-announcement price discovery.…”

Section: Introductionmentioning

confidence: 99%

Information Coordination: Does Preannouncement Media Coverage Improve Earnings Expectations?*

Xu¹

2022

Contemporary Accting Res

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This study examines whether and how media coverage improves price discovery before earnings announcements. Given the broad reach and timeliness of media coverage, understanding its role in forming earnings expectations is important. I posit that the media specialize in searching for and screening news, while institutional investors and financial analysts specialize in interpreting and integrating information. I expect these coordinated efforts to improve earnings expectations and preempt upcoming earnings announcements. Consistent with this prediction, I find (i) preannouncement media coverage is negatively associated with price revaluations during earnings announcements, (ii) preannouncement media coverage is positively associated with institutional investors' information acquisition and financial analysts' forecast frequency, and (iii) institutional information acquisition and analyst forecast activity are two mechanisms by which media coverage preempts upcoming earnings. My main results are robust to short‐window tests and identification concerns. Overall, my findings suggest that media coverage coordinates information efforts and accelerates the incorporation of information in prices, facilitating preannouncement price discovery.

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“…As such, journalists may be motivated to focus on other newsworthy factors in their coverage, beyond simply reporting on the firm’s performance. Thus, even in the context of a firm’s earnings announcement, which features a clear and quantifiable outcome (if the firm misses or beats earnings), how the media cover and write about earnings may diverge from how firms appear to be thinking about their earnings coverage (Guest, 2021; Miller & Skinner, 2015).…”

mentioning

confidence: 99%

Media Coverage of Earnings Announcements: How Newsworthiness Shapes Media Volume and Tone

Oliver

Campbell²,

Graffin³

et al. 2022

Journal of Management

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Media coverage of earnings is consequential for firms. As such, firms work hard to ensure their performance beats analyst estimates to avoid negative coverage. However, the relationship between performance and coverage might not be as straightforward as firms assume because media coverage is a socially constructed process that reflects journalists’ social and cognitive biases while producing newsworthy content. With this in mind, we unpack the concept of newsworthiness and develop theory regarding how the media targets, in the earnings context, deviance that is socially significant for stakeholders or attaches a deviance frame to news of social significance. In doing so, we examine how the media’s pursuit of newsworthiness shapes the relationship between critical characteristics of earnings announcements—including the firm’s earnings performance, its press releases surrounding earnings, its prior reputation, and its prior media visibility—and media volume and tone. The results of our empirical tests are broadly consistent with our theorizing. Our theory and findings contribute to research on earnings, media coverage, and social evaluations.

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The Information Role of the Media in Earnings News

Cited by 78 publications

References 92 publications

Face Value: Trait Impressions, Performance Characteristics, and Market Outcomes for Financial Analysts

Face Value: Trait Impressions, Performance Characteristics, and Market Outcomes for Financial Analysts

Information Coordination: Does Preannouncement Media Coverage Improve Earnings Expectations?*

Media Coverage of Earnings Announcements: How Newsworthiness Shapes Media Volume and Tone

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