Media Attention and Selective Managerial Bad News Hoarding

Abstract

This paper investigates whether media attention impacts the extent to which managers hoard bad news in general and whether the effect applies to conspicuous news, such as earnings news. We find that greater media attention escalates managerial bad news hoarding; however, such an effect does not apply to bad earnings news. These findings imply that managers selectively hoard bad news that is not as regulated and as conspicuous as earnings news. In the cross-sectional analyses, we find that typical corporate governance mechanisms are not effective in mitigating bad news hoarding; rather, we find that the effect of media attention on bad news hoarding is amplified when management is more short-term oriented.

Keywords: Media attention, Crash risk, Selective bad news hoarding

JEL Classification: G12, G14, G32