The monitoring role of the media: Evidence from earnings management

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

doi:10.1111/jbfa.12490

journal article Aug 21, 2020

The monitoring role of the media: Evidence from earnings management

Yangyang Chen

C. S. Agnes Cheng Shuo Li

Jingran Zhao

Journal of Business Finance & Accounting Vol. 48 No. 3-4 pp. 533-563 · Wiley

View at Publisher Save 10.1111/jbfa.12490

Abstract

AbstractIn 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.

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Details

Published: Aug 21, 2020
Vol/Issue: 48(3-4)
Pages: 533-563
License: View

Authors

Y

Yangyang Chen

Department of Accountancy City University of Hong Kong

C

C. S. Agnes Cheng

School of Accounting and Finance Hong Kong Polytechnic University

S

Shuo Li

College of Business and Economics Western Washington University

J

Jingran Zhao

School of Accounting and Finance Hong Kong Polytechnic University

Cite This Article

Yangyang Chen, C. S. Agnes Cheng, Shuo Li, et al. (2020). The monitoring role of the media: Evidence from earnings management. Journal of Business Finance & Accounting, 48(3-4), 533-563. https://doi.org/10.1111/jbfa.12490

The monitoring role of the media: Evidence from earnings management

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