Do journalists help investors analyze firms' earnings news?

I examine whether the market's reaction to firms' earnings news varies with analysis (or editorial content) produced by financial journalists. A series of natural experiments at The Wall Street Journal (WSJ) suggests that WSJ articles increase trading volume and improve price discovery at S&P 500 earnings announcements. The effects are stronger when an article contains more original analysis and less content reproduced from the firm's press release. This evidence refines inferences from prior studies that find media dissemination, but not analysis, makes the market's earnings response more efficient. Instead, my paper suggests media analysis also enhances investors' trading decisions by improving their understanding of earnings news, albeit for a limited set of large firms. In other words, journalists' analysis efforts provide value to readers, which helps explain the continued production of costly earnings-related analysis amid increasing pressure from low-cost information sources.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2018

Author dc:creator

• Guest, Nicholas M

Advisor dc:contributor.advisor

• S.P. Kothari and Eric So.

• Sloan School of Management.

Statement dc:rights

• MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/118014

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/118014