The conglomeration of news media is having impacts on financial markets.
Flora Sun, assistant professor of accounting at Binghamton University, explains why.
Dr. Sun’s research interests include disclosure and information production in capital markets, focusing on the determinants of media coverage and its impact on capital markets. Sun is
also interested in studying how investors use financial information from other information intermediaries, such as sell-side equity analysts and credit-rating agencies.
The study, “Common Media Holding Companies and the Uniqueness of Business Press Content,” was published in The Accounting Review, an American Accounting Association journal. Sun co-authored the paper along with faculty researchers from Indiana University, Harvard Business School and Texas A&M University.
Dr. Sun has a Bachelor of Business Administration, from The Hong Kong Polytechnic University, a Master of Public Administration from the University of Austin, Texas and a PhD from Indiana University.
News Media Conglomeration and Financial Markets
Have you ever noticed a swath of similar business news stories about a particular topic during a Google search?
Why might a story on a news site in New York be so similar to one from a site in, for example, Wisconsin? It’s likely because the same media company owns them — and it’s become more commonplace nationwide as news outlets grapple with dwindling resources.
This consolidation of news outlets is key to new research I co-authored that examines how business news outlets that produce similar news stories could have negative implications for financial markets. Fewer options for unique news content could make investors less efficient at interpreting important information in earnings reports.
For the study, we reviewed news articles about earnings announcements in 34 major media outlets involving almost 4,500 publicly traded companies between 2007 and 2019. In all, more than 280,000 articles covering over 95,000 earnings announcements were examined.
Using various statistical tools to analyze the data, we have determined that individual members of group media companies often take similar approaches when portraying the same event in their news coverage.
Many market participants are likely unaware of this, as these media outlets often appear unrelated and consolidation of media companies nationwide may weaken the media’s role as an information intermediary.
This indicates how media outlets today likely have higher incentives to share content due to economic pressures. These pressures could produce similar content at the expense of individual quality.
It’s important to remember that this research doesn’t say the media is always biased; however, it does demonstrate how investors should be aware of this scenario in today’s media landscape and how it could affect the market.
Read More:
BingUNews: December 11, 2024
How can similar news stories influence financial markets? Here’s what investors need to know
New study co-authored by Flora Sun, assistant professor of accounting, Binghamton University School of Management, as she explores the impact of common media companies that publish similar business content in different news outlets.
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