Research

Common Media Holding Companies and the Uniqueness of Business Press Content

• Co-authors: Kenneth Merkley (Indiana University), Joseph Pacelli (Harvard Business School), and Brady Twedt (Texas A&M University)

• The Accounting Review, Vol. 100, No. 1 (January 2025): 381-405

• Abstract: We examine how common media holding companies impact the uniqueness of business press content. Consistent with common media holding companies reducing the diversity of perspectives among journalists, we find that media outlets are more likely to cover the same earnings announcement and utilize more similar tone and content when they belong to a common holding company. We provide evidence that these effects are enhanced by outlet reach and economic incentives to share content. Finally, we provide evidence consistent with coverage by common media holding companies impeding price formation. Overall, our findings suggest that content within common media holding companies is less diverse, and that this may have negative implications for markets.

Working Paper: After-Hours Market Reactions and Media Coverage of Firms’ Earnings Announcements

• Dissertation committee: Kenneth Merkley (Chair), Brian Miller, Noah Stoffman, and Jim Wahlen

• Abstract: This study examines the dynamic relation between the market’s demand for information about firm performance and the media’s supply of information. Using the immediate after-hours trading following firms’ earnings announcements as a novel setting, I find evidence that stronger initial reactions trigger greater media attention, especially for smaller firms and firms with limited information environments. Consistent with the media reinforcing the initial market reactions, I document a positive relation between the initial after-hours market reactions and media article sentiment. However, when the initial market reaction is negative, I find a higher level of disagreement on article sentiment among media outlets. In addition, I find that the media intensifies firms’ initial after-hours market reactions and affects their regular-hours market returns on the next trading day. Overall, the evidence suggests that when covering firms’ earnings announcements, the media attends to the immediate market reactions and supplies information in response to the market’s demand differently. These results shed important light on the economic consequences arising from the dynamic interactions between the media and capital markets.

Working Paper: Performance Framing in Earnings News: Evidence from Media Headlines

• Co-authors: Farzana Afrin (California State University, Fullerton) and Kenneth Merkley (Indiana University)

• Abstract: This study examines the determinants and market consequences of media performance framing in earnings news. We focus on media headlines and classify performance references into non-GAAP earnings, GAAP year-over-year comparisons, GAAP earnings surprises relative to analysts’ forecasts, and generic performance summaries. Using a comprehensive sample of news coverage of earnings announcements from 2007 to 2020, we document substantial variation in how journalists frame firm performance. We show that performance framing reflects journalist production constraints, the nature of firms’ performance signals, the firm information environment, and managerial disclosure choices. We further find that market reactions to earnings surprises are stronger when headlines emphasize analyst forecast benchmarks, whereas other forms of framing have limited effects. Overall, our findings highlight the role of media intermediaries in shaping investors’ interpretation of accounting information.

Work in Progress: Financial Literacy and the Media: Evidence from Illiquid After-Hours Markets

• Co-author: Sean Wang (Southern Methodist University)

Work in Progress: Compensation Responses to SEC Investigations of Connected Firms

• Co-authors: Terrence Blackburne (Oregon State University) and Jason Xiao (Binghamton University)

Work in Progress: Media Coverage of Unionized Firms

• Co-author: Hunter Pearson (University of Houston)

Work in Progress: Material Weakness Severity and Disclosure Complexity

• Co-authors: Millie Hutton (University of Mississippi) and Marcy Shepardson (Indiana University)