My research focuses on the role of information intermediaries in capital markets, a growing discipline with a wealth of potential because of its ever-expanding pool of data sources and still largely unexplored implications. Information intermediaries include news media, financial analysts, auditors, institutional investors exerting their influence, and retail investors searching out firm and market information. The breadth of these information outlets and seekers puts me squarely in the generalist category of finance research, incorporating many elements of corporate finance, such as governance and capital structure, and fundamentals and innovations in asset pricing. My research also incorporates considerations of efficient markets and behavioral finance.
The first essay of my dissertation examines the role of local media employment on idiosyncratic risk of nearby firms. Using Bureau of Labor Statistics data and the Metropolitan Statistical Areas where corporations are located, I find that when the number of journalists declines in the areas where a company is headquartered, firm-specific risk increases. I consider several channels through which this risk increases and find it is the result of reduced monitoring rather than reduced attention. My second essay attempts to confirms that levels of local media employment have similar effects on the returns of nearby firms as more widely studied attention-generating media, such as national, international, and business press. In my third essay, I directly explore whether a reduction in local media employment affects executive and board behavior. I find evidence consistent with increased levels of earnings management, higher CEO compensation, more entrenchment. and other executive behavior consistent with principal-agent problems. I also find increased costs of debt, consistent with lenders recognizing the reduction in monitoring that results from fewer journalists available to cover the firm. I believe the third essay, in particular, has potential for placement in high level journals, particularly buttressed by the findings in the first two essays.
Although the research in my dissertation focuses on “legacy” media, such as newspapers and television broadcasters, it incorporates a number of contemporary informational trends such as Google search traffic and high-frequency trading to provide further evidence on the role of an infrequently considered intermediary of firms’ information environment. My future research agenda more directly focuses on some of the other elements of this information environment. My current research projects include:
Exploring the spillover effects on analysts whose peers have participated in firm Analyst/Investor Days, for which I am hand-collecting data from Bloomberg terminal analyst forecasts.
The intraday trading and persistent pricing effects of disclosure via social media of potentially value-relevant but non-accounting information, in particular viewership and engagement information released by streaming services.
I have requested access to Facebook’s Social Connectedness Index data to explore research questions about the effect of connectedness on corporate governance, other monitoring, and merger and acquisition activity.
In addition to having the potential to reach top journals in finance, I believe, my research has the potential to be of interest beyond academic publications. Because I have some experience working as a member of the media, I believe I am uniquely situated to help promote my research to a more general audience, which I hope will raise the profile of my institution in the national and international press.