False News Determinants and its Association with Financial Reporting Quality

59 Pages Posted: 17 Aug 2020

See all articles by Mark J. Kohlbeck

Mark J. Kohlbeck

Florida Atlantic University - School of Accounting

Hamid Vakilzadeh

University of Wisconsin - Whitewater - College of Business and Economics

Date Written: July 12, 2020

Abstract

We examine the determinants and financial reporting quality implications of false news about a company. False news is defined as information presented as factually accurate, but contain fabricated facts and is deliberately made public to mislead the reader. Importantly, it is later denied by a credible source. We investigate false news by focusing on negative false news initiated outside the firm. Building on financial motives behind incidents of false news, we examine whether industry characteristics and news coverage play a role in making a firm a target for false news. We find that lower competition, market leadership, and higher news coverage are associated with an increased likelihood of false news. We further examine the impact of false news on the firm’s financial reporting behavior. Consistent with our predictions, we find that firms targeted by false news have lower financial reporting quality.

Keywords: False News, Accounting Quality, Earnings Management

JEL Classification: M41

Suggested Citation

Kohlbeck, Mark J. and Vakilzadeh, Hamid, False News Determinants and its Association with Financial Reporting Quality (July 12, 2020). Available at SSRN: https://ssrn.com/abstract=3652483 or http://dx.doi.org/10.2139/ssrn.3652483

Mark J. Kohlbeck

Florida Atlantic University - School of Accounting ( email )

777 Glades Avenue
KH 119
Boca Raton, FL 33431-0991
United States
561-297-1363 (Phone)

Hamid Vakilzadeh (Contact Author)

University of Wisconsin - Whitewater - College of Business and Economics ( email )

Whitewater, WI 53190
United States

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