Keywords

business press, accrual anomaly, cash flow anomaly, mispricing, information dissemination, information creation

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 2000–2010, 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.

Original Publication Citation

Drake, Michael S. and Guest, Nicholas and Twedt, Brady J., The Media and Mispricing: The Role of the Business Press in the Pricing of Accounting Information. The Accounting Review 89 (5), 2014. Available at SSRN: https://ssrn.com/abstract=2269103 or http://dx.doi.org/10.2139/ssrn.2269103

Document Type

Peer-Reviewed Article

Publication Date

2014

Publisher

The Accounting Review

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Full Professor

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Accounting Commons

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