Curbing Enthusiasm: Media Sentiment and the Disciplining Role of Quarterly Earnings Announcements

The Accounting Review, Forthcoming

56 Pages Posted: 21 May 2023

See all articles by Eric Holzman

Eric Holzman

Indiana University

Brian P. Miller

Indiana University - Kelley School of Business - Department of Accounting

Brady J. Twedt

Texas A&M University - Department of Accounting

Date Written: May 15, 2023

Abstract

A longstanding literature suggests that earnings provide the market with relevant information about firm performance, but one often overlooked benefit is their role in disciplining market expectations. This study examines the role of earnings announcements in constraining potential mispricing associated with firm-specific media sentiment. We show that media sentiment driven quarterly returns (orthogonal to risk factors and fundamental news) largely reverse when public earnings are released. Our results suggest that quarterly earnings announcements play an important role in reducing media sentiment-related mispricing.

Keywords: media sentiment, earnings announcements, mispricing

JEL Classification: G14, L82, M41

Suggested Citation

Holzman, Eric and Miller, Brian P. and Twedt, Brady J., Curbing Enthusiasm: Media Sentiment and the Disciplining Role of Quarterly Earnings Announcements (May 15, 2023). The Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4449028

Eric Holzman

Indiana University ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Brian P. Miller (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
812-855-2606 (Phone)

Brady J. Twedt

Texas A&M University - Department of Accounting ( email )

Mays Business School
College Station, TX 77843-4353
United States

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