The governance effect of the media's news dissemination role: Evidence from insider trading

Lili Dai, Jerry T. Parwada, Bohui Zhang

    Research output: Contribution to journalArticlepeer-review

    244 Citations (Scopus)

    Abstract

    We investigate whether the media plays a role in corporate governance by disseminating news. Using a comprehensive data set of corporate and insider news coverage for the 2001-2012 period, we show that the media reduces insiders' future trading profits by disseminating news on prior insiders' trades available from regulatory filings. We find support for three economic mechanisms underlying the disciplining effect of news dissemination: the reduction of information asymmetry, concerns regarding litigation risk, and the impact on insiders' personal wealth and reputation. Our findings provide new insights into the real effect of news dissemination.

    Original languageEnglish
    Pages (from-to)331-366
    Number of pages36
    JournalJournal of Accounting Research
    Volume53
    Issue number2
    DOIs
    Publication statusPublished - 1 May 2015

    Fingerprint

    Dive into the research topics of 'The governance effect of the media's news dissemination role: Evidence from insider trading'. Together they form a unique fingerprint.

    Cite this