Financial Journalism and Quarterly Earnings Guidance

71 Pages Posted: 5 Aug 2019 Last revised: 3 Jun 2020

See all articles by Jihun Bae

Jihun Bae

Erasmus University Rotterdam

Robin Litjens

Tilburg University - CentER and Department of Accountancy

Yachang Zeng

Nanyang Technological University

Multiple version iconThere are 2 versions of this paper

Date Written: June 3, 2020


Financial journalists have two countervailing incentives when reporting on a firm’s quarterly earnings guidance. On the one hand, their explicit incentive to attract readership leads them to express discrepant views that deviate from the guidance news managers intend to deliver. We hypothesize that journalists’ tendency to express discrepant views induces managers to stop issuing guidance because it leads to greater investor response uncertainty and, in turn, nondisclosure in equilibrium (media framing hypothesis). On the other hand, financial journalists have implicit quid pro quo incentives to curry favor with managers in exchange for information access or advertising revenue. Their coverage of guidance news would reinforce the intended guidance message and have no incremental impact on future guidance decisions (media reinforcing hypothesis). Using a comprehensive dataset of financial journalists’ articles covering quarterly earnings guidance, we find evidence supporting the media framing hypothesis. Our study provides fresh insight into the information flow in financial markets. We document evidence that the media, through the effect of its discrepant views, curtails the likelihood of managers issuing earnings guidance.

Keywords: financial journalist; full article; news flash; quarterly earnings guidance; media reshaping hypothesis; media reinforcing hypothesis

JEL Classification: M41

Suggested Citation

Bae, Jihun and Litjens, Robin and Zeng, Yachang, Financial Journalism and Quarterly Earnings Guidance (June 3, 2020). Available at SSRN: or

Jihun Bae

Erasmus University Rotterdam ( email )

Burgemeester Oudlaan 50
Rotterdam, 3062 PA

Robin Litjens

Tilburg University - CentER and Department of Accountancy ( email )

P.O. Box 90153
Tilburg, 5000 LE

Yachang Zeng (Contact Author)

Nanyang Technological University ( email )

Singapore, 639798

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics