The Impact of the Media on the Corporate Financial Information Environment

  • Nikolaos Tsileponis

Student thesis: Phd


In this thesis, I examine how the corporate financial information environment is shaped by the financial media. The thesis consists of three essays. In the first essay, I examine the role of voluntary company-initiated disclosures about firm financial performance as a stimulus for coverage in the financial press. I provide evidence that media coverage is affected by firm level disclosure management. Specifically, a firm's issuance of press releases attracts more media articles about the firm leading to greater abnormal returns and trading volumes. I find that there is a spike of media articles on the same day and one trading day following firms' press releases. I use a unique experiment, which differentiates between the online and print versions of the Wall Street Journal, to establish a causal relation between press releases and media coverage. My findings challenge the common assumption in the literature that media coverage is exogenous to the firm. In the second essay, I find that the financial media plays a significant role in enriching a firm's information environment by moderating the tone of corporate press releases. Using textual analysis, I show that the press moderates both the positive and negative tone of corporate press releases. However, the effect is asymmetric with the media disproportionately downplaying the tone of favourable corporate press releases, in line with the premise that management's highly positive news disclosures are less convincing. In addition, I find that there is an abnormal market response to the linguistic content of financial media articles rather than to the content of corporate press releases, suggesting that the tone of press-issued information is more value relevant to market participants compared to that of management's disclosures. Overall, this study offers robust evidence supporting the view that the financial media plays an important role as an information intermediary. In the third and last essay, I investigate the information dissemination and information creation roles of the financial media by examining whether the rebroadcasting of firm-initiated news (parroting) and the creation of original information by the media influence the stock market reaction to news disclosures differently. Using textual analysis, I calculate the tone expressed in corporate press releases and related articles in the financial media, and further distinguish between parroted (from the press release) and non-parroted (i.e., original) media tonal language. I provide evidence supporting a dual role of the press that affects price formation through both its information dissemination and information creation roles. However, my findings are consistent with press-generated information having the most significant impact on market reaction. My results also indicate that there is an asymmetric market effect, with negative original media tone being more value relevant to market participants compared to managerial and media-parroted (positive and negative) tonal language. As such, my findings have important implications for studies on the role of the financial media as an information intermediary in capital markets, and suggest that market participants perceive a difference between simple dissemination of firm-initiated information and new reporter-generated information.
Date of Award31 Dec 2017
Original languageEnglish
Awarding Institution
  • The University of Manchester
SupervisorMartin Walker (Supervisor) & Konstantinos Stathopoulos (Supervisor)


  • content analysis
  • strategic disclosure
  • information environment
  • financial media
  • information intermediary

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