Abstract

This study investigates whether media attention pressures managers to live up to market expectations. Using a comprehensive dataset of media coverage on U.S. public firms, we find that media coverage pressures, rather than deters, managers to manipulate reported earnings to reduce management forecast errors, and the effect is mainly driven by the media’s information dissemination role rather than its information creation role. In addition, we show that the association is stronger when firms face higher litigation risk, when managers have higher reputational concerns, and when corporate governance is weaker. Our findings provide new insights into a potentially negative effect of media coverage in the capital markets.

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