The Media and Mispricing: The Role of the Business Press in the Pricing of Accounting Information

Accounting Review - Tập 89 Số 5 - Trang 1673-1701 - 2014
Michael S. Drake1, Nicholas M. Guest2, Brady J. Twedt3
1Brigham Young University
2Massachusetts Institute of Technology,
3Indiana University,

Tóm tắt

ABSTRACT This study investigates the role of the business press in the pricing of accounting information. Using a comprehensive dataset of more than 111,000 earnings-related business press articles published from 2000 to 2010, we find that press coverage of the annual earnings announcement mitigates cash flow mispricing, but has a negligible effect on accrual mispricing. We provide evidence that this impact is driven primarily by the press disseminating the information more broadly, rather than by the creation of new content that helps investors understand the implications of accounting information. Our results suggest that the business press plays an important role in facilitating the market's ability to efficiently impound accounting information into stock prices and provide new insights into the role of the business press as an information intermediary in capital markets.

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