Social Connections Between Media and Firm Executives and the Properties of Media Reporting

Review of Accounting Studies, Forthcoming

Posted: 22 Jul 2020

See all articles by Yi Ru

Yi Ru

Renmin University of China - Business School

Jian Xue

Tsinghua University - School of Economics & Management

Yuan Zhang

University of Texas at Dallas

Xin Zhou

XY Investments

Date Written: June 25, 2020

Abstract

We study how social connections between top executives of media and listed firms affect the properties of media reporting. We find that socially connected media are significantly more likely to cover a firm than their unconnected counterparts. Their reporting is significantly more optimistically toned and contains significantly less information, and both of these effects are significantly mitigated when the firm has better information environment as represented by greater analyst coverage and larger firm size. Additional analyses show that characteristics of the underlying news, firm, or media also affect the effects of social connections on media reporting properties. Collectively, our evidence suggests the impairment of media independence when media and firms have social connections and the importance of alternative information sources in mitigating this effect.

Keywords: Social ties, Media coverage, Media tone, Information

JEL Classification: G14, L82, M41, Z13

Suggested Citation

Ru, Yi and Xue, Jian and Zhang, Yuan and Zhou, Xin, Social Connections Between Media and Firm Executives and the Properties of Media Reporting (June 25, 2020). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3635781

Yi Ru

Renmin University of China - Business School ( email )

Room 929
Mingde Business Building
Beijing, Beijing 100872
China

Jian Xue

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

Yuan Zhang (Contact Author)

University of Texas at Dallas ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Xin Zhou

XY Investments

China

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