Studies on the Information Production of Financial Journalists

Abstract

A large body of literature in accounting and finance documents the role of business journalists as information intermediaries and their impact on capital markets. While prior literature provides extensive evidence on the consequences of journalist news reporting, we know relatively little about factors that shape journalist reporting. As noted by Miller and Skinner (2015, p.232), understanding the determinants of journalist reporting - for example, by considering journalists' interaction with other capital market participants - is crucial to facilitate a 'more complete theory of the role of the media in financial markets. In this thesis, I explore the determinants of business journalist reporting for firms using a large sample of news articles on S&P 500 firms over the past 39 years. My first study explores the influence of journalist-manager relationships on journalist' coverage decisions. Analysing journalists' coverage of S&P 500 firms over 39 years, I find that journalist-CEO fixed effects significantly contribute to coverage heterogeneity. I also find evidence of journalist co-migration during managerial turnover events, where journalists transit from covering the origin firm to the destination firm as executives move between them. Co-migration is more prevalent among journalists who previously referenced managers, indicating possible pre-existing relationships. Additionally, after co-migration, articles by co-migrating journalists for origin firms become shorter, less informative, and contain fewer manager references. However, articles by co-migrating journalists for destination firms with new managers are more informative than those by other journalists. Furthermore, the arrival of co-migrating journalists positively impacts the destination firm's information environment, leading to increased analyst coverage and improved forecast accuracy. Overall, this study highlights the significance of journalist-manager relationships in shaping firms' coverage. My second study examines journalists' use of analysts' comments in generating news content. Examining 123,127 news articles written by 6,048 journalists on S&P 500 firms from 1993 to 2017, I find that the inclusion of analysts' comments in shaping news narratives is nontrivial (hereafter, quote news). Journalists who write quote news are more likely to be female, possess less general and firm experience, and produce fewer news articles per year, however, they show a higher likelihood of being Pulitzer winners compared to their counterparts. Quoted analysts tend to have more accurate forecasts, longer general and firm experience, and focus on fewer industries than non-quoted analysts. In terms of implications, I find that quote news articles are longer, more informative, and covey more positive tones than non-quote news. They generate higher stock return volatility and abnormal trading volume, although these effects diminish over time. These implications to news articles quality and investors are more pronounced for quote news featuring firm-following analysts compared to non-firm following analysts. Overall, this study highlights the significant role of media interactions with analysts for journalists' news generation.