“Business Press Coverage and Management Earnings Guidance” by Dr. Yachang ZENG
Dr. Yachang ZENG
Assistant Professor of Accounting
Nanyang Business School
Nanyang Technological University
We examine whether media coverage of current management guidance affects managers’ future guidance decision. We find evidence that the dissemination media’s coverage tends to increase the likelihood of managers’ future earnings guidance, consistent with the view that the business media’s “free dissemination” broadcasts a firm’s management guidance more broadly without incurring any additional costs to the firm’s shareholders. The media’s information creation, on the other hand, tends to discourage the issuance of future management guidance, consistent with the view that news content generated by the creation media might reshape managers’ intended message in guidance and cause managers to question the value of their guidance decisions. We also find evidence that the negative impact of the media’s information creation on future management guidance is attenuated by high information visibility (e.g., through analysts’ monitoring function), while the positive impact of the media’s information dissemination on future management guidance is not affected by information visibility. Our findings provide new insight into the relations between business press coverage and managers’ future earnings guidance.