Media Tone and CEO Power

CEO turnover and audit pricing: the role of media tone

“…Extant research on linguistic analysis indicates that positive and negative tones denote separate dimensions rather than two ends of the same spectrum (Baumeister et al , 2001; Shipilov et al , 2019). Similar to Huang et al (2018) and Liu et al (2017), I measure the tone of the news articles with CEO names using Loughran and McDonald (2011) “alternative negative word list in financial text”, which is a relatively comprehensive dictionary without any apparent missing negative or positive words and created with financial communication in mind (Loughran and McDonald, 2015). Coding tone based on the Loughran and McDonald (2011) financial dictionary allows for a substantial amount of source material and generates relatively objective measures (Graf-Valchy et al , 2020).…”

“…Prior studies document that the media can detect accounting fraud (Joe et al , 2009; Miller, 2006), affect a manager’s capital allocation decision (Liu and McConnell, 2013), increase the probability of forced top-executive turnover (You et al , 2017) and reduce the cost of debt (Gao et al , 2020) and stock price crash risk (An et al , 2020). In addition, media coverage helps in reducing uncertainty, increasing transparency, enhancing credibility and highlighting the feasibility of future projects (Huang et al , 2018). However, there is little empirical evidence on the role of media as an important source of external information that is potentially useful for assessing audit risk.…”

“…Extant research on linguistic analysis indicates that positive and negative tones denote separate dimensions rather than two ends of the same spectrum(Baumeister et al, 2001;Shipilov et al, 2019). Similar toHuang et al (2018) andLiu et al (2017), I measure the tone of the news articles with CEO names usingLoughran and McDonald (…”