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: Media Sophistication and Earnings News Interpretation: Evidence from After-Hours Markets

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

• Abstract: This paper examines how media sophistication shapes how financial journalists interpret early market signals when covering firms’ earnings announcements. Using after-hours releases, we exploit the timing of price reactions and media coverage to identify the direction of influence from market to media. While media tone generally follows initial price movements, it reflects earnings information when price and fundamentals conflict, indicating that journalists exercise independent judgment rather than simply echoing prices. The media’s coverage response to initial market reactions also varies systematically with media sophistication. Professional outlets adjust their reporting to the informativeness of price signals, whereas nonprofessional outlets respond more mechanically to price movements. These differences have implications for price discovery. Professional coverage is associated with more efficient incorporation of earnings information into prices, particularly when initial price signals are less reliable. Overall, our findings highlight that media sophistication shapes how market signals are interpreted and incorporated into prices.

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: 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)