The monitoring role of the media: Evidence from earnings management

Yangyang Chen, C. S.Agnes Cheng, Shuo Li, Jingran Zhao

Research output: Journal article publicationJournal articleAcademic researchpeer-review

15 Citations (Scopus)

Abstract

In response to the recent debate on the media, this paper examines the effect of media coverage on firm earnings management. Even if prior studies (Dyck et al., 2010; Miller, 2006) have documented the media's role in detecting and deterring accounting fraud (or extreme earnings management), it is unclear ex ante whether the media amplifies or curbs less egregious earnings management. Our results show that media coverage is negatively associated with both accrual-based and real earnings management, suggesting that the media serves as an external monitor that curbs managers’ opportunistic earnings management behaviors. Further analyses show that the effect of media coverage on earnings management is more pronounced when monitoring from auditors is weak and when the other information intermediaries are active. Overall, the findings suggest a monitoring role of the media in firm financial reporting practices.

Original languageEnglish
JournalJournal of Business Finance and Accounting
DOIs
Publication statusPublished - Apr 2021

Keywords

  • earnings management
  • media coverage
  • monitoring

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance

Fingerprint

Dive into the research topics of 'The monitoring role of the media: Evidence from earnings management'. Together they form a unique fingerprint.

Cite this