The monitoring role of the media: Evidence from earnings management

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

doi:10.1111/jbfa.12490

Cited by 43 publications

(41 citation statements)

References 84 publications

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“…Miller (2006) and Dyck et al (2010) demonstrate the role that media monitoring can play in curbing opportunistic management behaviors such as accounting fraud or extreme surplus management. Chen et al (2021) find that the rise in the number of media reports can effectively curb the degree of accrual surplus management and real activity surplus management of firms, indicating that the media, as external monitoring, can curb managers' opportunistic surplus management. Consequently, management opportunistic behavior has been effectively curbed when the intensity of media regulation is relatively higher.…”

Section: Research Hypothesesmentioning

confidence: 93%

The Influence of COVID-19 Pandemic on Management Earnings Forecasts

Zhou

et al. 2022

Front. Psychol.

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As the biggest black swan event of 2020, the COVID-19 pandemic has significantly weakened the ability of corporate stakeholders to monitor companies on site. In this context, exploring whether the on-site supervision restrictions triggered by the COVID-19 pandemic affect management earnings forecast disclosure is crucial to protect investors' interests and promote the stable development of the capital market. Based on quarterly data of Chinese A-share listed companies' earnings forecasts, this paper finds that: First, when the company's registry region is more severely affected by the COVID-19 pandemic, the company has less willingness to disclose its management earnings forecast. And those released forecasts tend to have lower qualities. Second, a higher level of media monitoring and a better legal environment can mitigate the negative impacts of the COVID-19 pandemic on both the willingness and the quality of management earnings forecast disclosure. Furthermore, mediating effect analysis shows that, the reduced on-site monitoring activities that were originally implemented by independent directors, institutional investors, and analysts during the epidemic period greatly limited stakeholders' monitoring efficiency, and thus cause significant influence on the disclosure of management earnings forecasts.

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Section: Research Hypothesesmentioning

confidence: 93%

The Influence of COVID-19 Pandemic on Management Earnings Forecasts

Zhou

et al. 2022

Front. Psychol.

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“…One of the essential causes of inefficient labor investment is information asymmetry. Media coverage, in general serving as an external monitor of firms' executives, can help curb earnings management and make financial reporting more transparent (Chen et al 2021), thereby mitigating labor investment inefficiency arising from information asymmetry.…”

Section: Information Disclosure Mechanismmentioning

confidence: 99%

“…In line with Chen et al (2021), we employ accrual earnings management (EM) to measure the quality of firms' information disclosure. Similar to the mechanism 10 show the results of the information disclosure mechanism.…”

Section: Information Disclosure Mechanismmentioning

confidence: 99%

Media Coverage and Labor Investment Efficiency: Evidence from China*

Liu

Wang

2023

Asia-Pac J of Fin Stud

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Using 2.09 million pieces of media coverage associated with Chinese firms during 2006–2019, we find a significantly positive relationship between media coverage and labor investment efficiency. Both newspaper and online media coverage can effectively reduce firms' labor over‐investment and under‐investment. Our results are robust after addressing a range of endogeneity concerns. Further analyses show that the positive relationship between media coverage and labor investment efficiency is more pronounced for firms with higher labor cost stickiness or when human capital is more important to the firm's business model. Mechanism analyses reveal that media coverage improves labor investment efficiency through the compensation incentive mechanism, supervision mechanism, and information disclosure mechanism.

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“…Strengthened by the internet, nowadays (social) media are considered as the Fifth Estate (Sormanen & Dutton, 2015), and they serve as soft control of traditional media (Lahey, 2016). Chen et al (2021) also examine the effect of media coverage on firm earnings management, documenting the media's role in detecting and deterring accounting fraud (or extreme earnings management). Authors suggest that the media serves as an external monitor that curbs managers' opportunistic accounting behaviors.…”

Section: Component #6: the Watchdogmentioning

confidence: 99%

Revisiting the Accounting Fraud Components: A Bottom-Up Approach Using the Twitter Platform

et al. 2021

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Despite the relevant economic and reputational impact of fraud, research in this field remains fragmented. This study aims to create a new framework for accounting fraud, defining its main components from the social media user’s perspective. In terms of research technique, an online data collection using social media platform was used retrieving, through the phyton web crawler procedure, 43,655 tweets containing the phrase “accounting fraud” from July 2006 to December 2019. Individual words were identified and treated within the selected tweets, excluding stop words and, finally, using a sparsity index. The proposed methodology, which overcomes traditional survey inherent bias efficiently, contributes to bridging the divide between academia and society. We find that Twitter users shape the Accounting Fraud Hexagon, composed by (i) The Object and the Tool (of misrepresentation), being the Financials, (ii) The (Guilty) Fraudster, (iii) The Defrauded, (iv) Materiality, (v) The Consequences, and (vi) the Watchdog. Our research has several implications. Our research identifies additional “angles” of vision to the traditional fraud triangle-diamond-pentagon theories compared with the existing top-down conceptual frameworks. Also, since it uses a bottom-up instead of a top-down approach, the study allows a more comprehensive definition of accounting fraud, thus contributing to the debate for a common language in this field. We expect to encourage more research using social media as a tool to test the literature built on in vitro theories empirically.

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The monitoring role of the media: Evidence from earnings management

Cited by 43 publications

References 84 publications

The Influence of COVID-19 Pandemic on Management Earnings Forecasts

The Influence of COVID-19 Pandemic on Management Earnings Forecasts

Media Coverage and Labor Investment Efficiency: Evidence from China*

Revisiting the Accounting Fraud Components: A Bottom-Up Approach Using the Twitter Platform

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