Media Coverage of Earnings Announcements: How Newsworthiness Shapes Media Volume and Tone

Media coverage of earnings is consequential for firms. As such, firms work hard to ensure their performance beats analyst estimates to avoid negative coverage. However, the relationship between performance and coverage might not be as straightforward as firms assume because media coverage is a socially constructed process that reflects journalists' social and cognitive biases while producing newsworthy content. With this in mind, we unpack the concept of newsworthiness and develop theory regarding how the media targets, in the earnings context, deviance that is socially significant for stakeholders or attaches a deviance frame to news of social significance. In doing so, we examine how the media's pursuit of newsworthiness shapes the relationship between critical characteristics of earnings announcements-including the firm's earnings performance, its press releases surrounding earnings, its prior reputation, and its prior media visibility-and media volume and tone. The results of our empirical tests are broadly consistent with our theorizing. Our theory and findings contribute to research on earnings, media coverage, and social evaluations.