Do Corporate Press Releases Drive Media Coverage?

Abstract

We examine the role of voluntary corporate disclosures about firms’ financial performance as a stimulus for business press coverage. We provide evidence that media coverage is affected by firm level disclosure management; a firm’s issuance of press releases attracts more media articles about the firm leading to greater abnormal returns and trading volumes. We find that there is a spike of media articles on the same day and one trading day following firms’ press releases. We 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. Our results are robust to controlling for firm characteristics, different model specifications as well as regular earnings announcements, which have been the focus of prior literature. We also show that our inferences are not sensitive to managers’ duty to disclose material information to investors. Ultimately, our findings challenge the common assumption in the literature that media coverage is exogenous to the firm.