Media Coverage and Firm Financial Reporting Quality
Posted: 31 May 2017
Date Written: May 31, 2017
It is challenging to study the effect of media coverage on firm financial reporting quality due to simultaneous factors that might affect both. Using a novel setting of high speed railway (HSR) openings as shocks to media coverage, we find a significant increase in media coverage when a new HSR connects both the firm and media. This effect is more pronounced for smaller firms and firms located in less developed regions. Next, we find an increase in firm financial reporting quality following the opening of a HSR connecting the firm and media. This change is positively associated with the change in media coverage following the event. Finally, our results are robust to an IV estimation instrumenting whether a firm or media is located on a HSR. Taken together, our evidence suggests that media coverage improves firms’ financial reporting quality.
Keywords: media coverage, financial reporting quality, high speed rail
JEL Classification: M4
Suggested Citation: Suggested Citation