Do Firms Strategically Use Non-Earnings  Press Releases

Abstract

This study examines how firms strategically utilize non-earnings press releases to offset poor financial performances. Using a dataset crawled from Naver.com and deep-learning, we classify news  originating from press releases and find that firms issue more non-earnings press releases in the fourth quarter following poor performance in the first three quarters. Market, however, does not respond to these releases from underperforming firms. We observe a negative association between future stock returns and advertorial news, suggesting that investors recognize firms' strategic use of these releases. The research underscores the strategic role of non-earnings press releases and their market impact.

Keywords: non-earnings press release, Disclosure, market response, strategic behavior, fourth quarter reporting