The Role of the Business Press in Creating and Disseminating Information Around Earnings Announcements

European Accounting Review, Forthcoming

53 Pages Posted: 12 Sep 2019 Last revised: 17 Sep 2019

See all articles by Joshua G. Coyne

Joshua G. Coyne

University of Memphis - School of Accountancy

Kevin Kim

University of Memphis

Sangwan Kim

University of Massachusetts Boston

Date Written: September 1, 2019

Abstract

This paper investigates the role of the business press in creating and disseminating information around earnings announcements by examining different motivations of trading volume. We find that press coverage is positively associated with trading activity motivated by differential interpretation and by differential belief revision, consistent with the press playing both an information creation and information dissemination role around earnings announcements. When we divide press coverage into full articles with additional editorial content and news flashes merely repeating verbatim of firm-disclosed press releases, we find that trading volume motivated by both differential interpretation and differential belief revision increases as coverage by full articles increases, and trading volume motivated by differential belief revision increases as coverage by news flashes increases. We also report that the differential interpretation effect of full articles is more pronounced when information users’ sophistication is high. Overall, we provide new evidence to the literature by showing that each type of press coverage plays an informational role in different motivations of trading activity.

Keywords: business press, differential interpretation, differential belief revision, earnings announcements, trading volume

JEL Classification: G14, M41

Suggested Citation

Coyne, Joshua G. and Kim, Kevin and Kim, Sangwan, The Role of the Business Press in Creating and Disseminating Information Around Earnings Announcements (September 1, 2019). European Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3263757

Joshua G. Coyne (Contact Author)

University of Memphis - School of Accountancy ( email )

Fogelman College of Business and Economics
Memphis, TN 38152-6460
United States

Kevin Kim

University of Memphis ( email )

Memphis, TN 38152-3370
United States

Sangwan Kim

University of Massachusetts Boston ( email )

100 Morrissey Blvd.
Boston, MA 02125
United States

HOME PAGE: http://https://www.umb.edu/faculty_staff/bio/sangwan_kim

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