Friends at WSJ
58 Pages Posted: 4 Jun 2018 Last revised: 25 Mar 2020
Date Written: March 5, 2020
I study the effect of firm–journalist connections on media slant and stock returns using a dataset on firm connections to Wall Street Journal (WSJ) reporters. When corporate events are covered by connected reporters, the news sentiment becomes markedly more favorable, leading to higher short-term stock returns and long-term price corrections. For identification, I instrument connected coverage using reporter turnover and find similar results. Connections to the media owner also matter. I use Rupert Murdoch’s acquisition of the WSJ as an exogenous shock and show that firms connected to Murdoch receive better coverage after the ownership change.
Keywords: News Sentiment, Mergers and Acquisitions, Financial Journalism, Social Connections
JEL Classification: D03, G02, G34
Suggested Citation: Suggested Citation