We find strong evidence of political polarization in the tone and coverage of corporate financial news. In particular, we find that the tone of corporate financial news coverage is more positive, and the likelihood that good (bad) news is reported is higher (lower), if the firm is politically aligned with the news source.Â
Consistent with this argument, we find that disagreement between news sources increases trading volume, and these effects are larger for firms at the political extremes.
We study nearly three decades of articles covering financial news on the 100 largest listed firms in the United States, published in the Wall Street Journal (WSJ) and the New York Times (NYT). These are the two most widely circulated national newspapers with business news sections, whose editorial pages occupy opposite ends of the political spectrum.
We identify firm-level political affiliation using campaign contributions by employees and corporate political action committees to Democratic and Republican Party candidates, in each election cycle between 1990 and 2016.
This paper examines the information content and consequences of third-party voting advice that arrives as news at an interim stage in corporate proxy contests.
We first document significant stock returns around announcements of proxy vote recommendations.
We then develop a multiequation empirical procedure for disentangling the price impact of prediction effects (changes in contest outcome probabilities) from the price impact of certification effects (changes in outcome-contingent valuations).
Both effects are present in the data: Voting advice is both predictive about contest outcomes and informative about the ability of dissidents to add value. Consequently, proxy advice plays a dual informational role.