Social connections between media and firm executives and the properties of media reporting

Yi Ru (), Jian Xue (), Yuan Zhang () and Xin Zhou ()
Additional contact information
Yi Ru: Renmin University of China
Jian Xue: Tsinghua University
Yuan Zhang: University of Texas at Dallas
Xin Zhou: XY Investments

Review of Accounting Studies, 2020, vol. 25, issue 3, No 4, 963-1001

Abstract: Abstract We study how social connections between top executives of media and listed firms affect the properties of media reporting. We find that socially connected media are significantly more likely to cover a firm than their unconnected counterparts. Their reporting is significantly more optimistically toned and contains significantly less information, and both of these effects are significantly mitigated when the firm has better information environment as represented by greater analyst coverage and larger firm size. Additional analyses show that characteristics of the underlying news, firm, or media also affect the effects of social connections on media reporting properties. Collectively, our evidence suggests the impairment of media independence when media and firms have social connections and the importance of alternative information sources in mitigating this effect.

Keywords: Social ties; Media coverage; Media tone; Information; G14; L82; M41; Z13 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s11142-020-09552-x

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