Media Coverage and Firm Financial Reporting Quality

Posted: 31 May 2017

See all articles by Deqiu Chen

Deqiu Chen

University of International Business and Economics (UIBE) - Business School

Xiumin Martin

Washington University in Saint Louis - Olin School of Business

Xinmin Zhang

University of International Business and Economics (UIBE) - Business School

Date Written: May 31, 2017

Abstract

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

Chen, Deqiu and Martin, Xiumin and Zhang, Xinmin, Media Coverage and Firm Financial Reporting Quality (May 31, 2017). Available at SSRN: https://ssrn.com/abstract=2978064

Deqiu Chen

University of International Business and Economics (UIBE) - Business School ( email )

Beijing
China

Xiumin Martin (Contact Author)

Washington University in Saint Louis - Olin School of Business ( email )

Saint Louis, MO 63130
United States

Xinmin Zhang

University of International Business and Economics (UIBE) - Business School ( email )

Beijing
China

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