Media Tone and Earnings Management before the Earnings Announcement: Evidence from China

Wang Huan ()
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Wang Huan: School of Economics and Finance, Xi’an Jiaotong University, Xi’an, 710061, China
Authors registered in the RePEc Author Service: Carlos David Carlos Cardona Cardona-Arenas

Economics - The Open-Access, Open-Assessment Journal, 2024, vol. 18, issue 1, 23

Abstract: This article examines the relationship between media tone and earnings management before the earnings announcement. Using data from China, I discover a positive relationship between media tone before the earnings announcement and earnings management. For companies whose managers sell their ownership in the next time and have prior media exposure, the beneficial relationship is more pronounced. The relationship between abnormal media tone before results declaration and earnings management appears to be weakened by external oversight. According to the findings, managers can use media slant in addition to earnings management as a way to increase stock price following an earnings announcement. I also find that managers may use two public channels to influence media tone before the earnings announcement: the distribution of preliminary accounting data and earnings pre-announcement. Our study expands on the media’s involvement in earnings management and offers proof of the concurrent use of multiple management techniques to artificially raise stock prices.

Keywords: earnings management; media tone; stock price; management opportunism (search for similar items in EconPapers)
JEL-codes: G14 M41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:econoa:v:18:y:2024:i:1:p:23:n:1001

DOI: 10.1515/econ-2022-0129

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