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סמינרים מחלקתיים

How does media coverage affect corporate disclosures?

Abstract:

We analyze the effect of media coverage on corporate voluntary disclosure. Specifically, we examine a model where a journalist who covers a firm chooses the precision of her information which may be disclosed voluntarily also by the firm's manager. We show that, in equilibrium, media coverage reduces the manager voluntary disclosure, the journalist obtains fully precise information about bad news but not about good news, and that the public is skeptical about a bad news report published by the journalist. Next, we analyze a setting of a sequential provision of information and show that the manager may withhold information that is better relative to the information in the news report but disclose information that is less favorable than in the news report.