e regarding how the press fulfills the informationalrole and no evidence regarding whether the press provides newinformation.
In this paper I use a sample of firms whose accounting was challenged
by the Securities and Exchange Commission (SEC) to examine whether
the press is involved in the early public identification of an accounting
issue. Further, I study whether the press directly identified the issue or isrebroadcasting information provided by more traditional intermediaries(analysts, auditors, and legal institutions). Finally, I examine whether thepress is systematically biased towards covering certain types of firms andfrauds. Combined, these analyses contribute to the literature by providinga more complete understanding of the press’s role as an information intermediaryin financial markets.
I use accounting, auditing, and enforcement releases (AAER) to identify
a sample of firms that were sanctioned by the SEC for accounting malfeasances.Use of AAER allows me to examine a sample of firms widely believedto have engaged in accounting fraud and provides objective measures of thecharacteristics of the fraud, such as the magnitude and nature of infractions.Mysample consists of 263 firms that have committed a wide range of accountingviolations. I find that the press publishes articles regarding accountingfraud prior to a public acknowledgment by the firm or SEC for 75 (29%) of
the firms.These 75 articles indicate that the press is involved in the early public disseminationof an accounting issue, suggesting they do fulfill an informationintermediary role. I analyze the content of the articles and use market tests toinvestigate whether the press is providing “original” information to the marketsor simply rebroadcasting information provided by other information
PRESS AS WATCHDOG 1003intermediaries. My results indicate that both occur. My first analysis examinesthe sources used to support the article. Many articles indicate the pressundertook original “investigative” reporting by analyzing a mix of information,
often including publicly available documents, to create its own
allegation of accounting misdeeds. However, other articles refer to traditionalinformation intermediaries, such as analysts, litigation/court actions,and auditor changes, suggesting the press treats rebroadcasting as a legitimateinformation role. Further supporting a dual role in the press, I findevidence that press outlets and writers that specialize in
business reporting
are more likely to provide original stories, while local papers and generalistsare more likely to rebroadcast existing information.
I next examine whether the articles provide incremental information to
capital market participants. I perform this analysis by informant category: reporteroriginal, analysts, auditors, and law. Prior work has argued that presscoverage is important due to the pressure it places on management (Dyckand Zingales [2002a], Dyck, Volchkova, and Zingales [2005]). If press coverageper se is informative, I would expect a negative response to all article
categories. Since reporter-generated analysis provides new information, I
predict a greater response to such articles. I find that the response is greaterfor articles based on reporter analysis than for those that rebroadcast fromother information intermediaries. After controlling for publication type,the response to reporter investigation is approximately −12.6%, while theresponse to rebro
本论文由英语论文网提供整理,提供论文代写,英语论文代写,代写论文,代写英语论文,代写留学生论文,代写英文论文,留学生论文代写相关核心关键词搜索。