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The governance effect of the media's news dissemination role: evidence from insider trading

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Dai, Lili; Parwada, Jerry T.; Zhang, Bohui

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We investigate whether the media plays a role in corporate governance by disseminating news. Using a comprehensive data set of corporate and insider news coverage for the 2001-2012 period, we show that the media reduces insiders' future trading profits by disseminating news on prior insiders' trades available from regulatory filings. We find support for three economic mechanisms underlying the disciplining effect of news dissemination: the reduction of information asymmetry, concerns regarding...[Show more]

dc.contributor.authorDai, Lili
dc.contributor.authorParwada, Jerry T.
dc.contributor.authorZhang, Bohui
dc.date.accessioned2015-09-07T06:06:14Z
dc.date.available2015-09-07T06:06:14Z
dc.identifier.issn0021-8456
dc.identifier.urihttp://hdl.handle.net/1885/15238
dc.description.abstractWe investigate whether the media plays a role in corporate governance by disseminating news. Using a comprehensive data set of corporate and insider news coverage for the 2001-2012 period, we show that the media reduces insiders' future trading profits by disseminating news on prior insiders' trades available from regulatory filings. We find support for three economic mechanisms underlying the disciplining effect of news dissemination: the reduction of information asymmetry, concerns regarding litigation risk, and the impact on insiders' personal wealth and reputation. Our findings provide new insights into the real effect of news dissemination.
dc.publisherWiley
dc.rightsCopyright ©, University of Chicago on behalf of the Accounting Research Center, 2015
dc.sourceJournal of Accounting Research
dc.subjectCorporate governance
dc.subjectInformation dissemination
dc.subjectInsider trading
dc.titleThe governance effect of the media's news dissemination role: evidence from insider trading
dc.typeJournal article
local.identifier.citationvolume53
dc.date.issued2015-05
local.identifier.ariespublicationu5260803xPUB57
local.publisher.urlhttp://au.wiley.com/WileyCDA/
local.type.statusPublished Version
local.contributor.affiliationDai, L. ANU College of Business and Economics, The Australian National University
local.description.embargo2037-12-31
local.bibliographicCitation.issue2
local.bibliographicCitation.startpage331
local.bibliographicCitation.lastpage366
local.identifier.doi10.1111/1475-679X.12073
CollectionsANU Research Publications

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