Friends at WSJ
54 Pages Posted: 4 Jun 2018 Last revised: 18 Apr 2019
Date Written: April 16, 2019
I study the effect of the firm–journalist connections on media slant and stock returns, using a dataset on the firm’s connections to Wall Street Journal (WSJ) reporters. When corporate events are covered by connected reporters, the news sentiment becomes markedly more favorable, leading to better short-term market reactions and long-term price corrections. For identification, I instrument the connected coverage with the reporters’ turnover and find similar results. Furthermore, using Rupert Murdoch’s acquisition of the WSJ as an exogenous shock to journalistic independence, I show that firms connected to Murdoch receive better coverage and higher returns after the ownership change.
Keywords: News Sentiment, Stock Returns, Mergers and Acquisitions, Financial Journalism, Social Connections
JEL Classification: D03, G02, G34
Suggested Citation: Suggested Citation