News Bias in Financial Journalists’ Social Networks
57 Pages Posted: 4 Jun 2018 Last revised: 29 Feb 2024
Date Written: February 27, 2024
Abstract
Connected financial journalists—those with working relationships, common school ties, or social media connections to company management—show a marked favorable bias in their news stories. These journalists are more likely to quote connected executives, include more ambiguous language, and portray other firms in the same social network more positively. Journalists’ bias has implications for both capital market outcomes and the journalists’ careers. I find that articles by connected journalists are associated with higher market prices upon news announcement and long-term price reversion. Connected M&A articles are correlated with increased bid competition, deal premiums, and termination rates. Moreover, connected journalists are more likely to leave journalism and join their associated industries in the long run. Taken together, the evidence suggests that financial journalists’ personal networks promote news bias and hinder the efficient dissemination of information.
Keywords: News bias, social networks, financial journalism, M&As, accounting fraud
JEL Classification: G14, G34, G40
Suggested Citation: Suggested Citation