Abstract
- We investigate the effect of corporate executives' connections with financial media on analyst forecast optimism. Some studies document that managers use their connections to benefit the firm. Alternatively, other studies show that managers use their connections to benefit themselves at the expense of the firm. Thus, it is difficult to predict ex-ante whether executives use their media connections to enhance information efficiency or distort information environment. We propose two hypotheses on the impact of financial media connections: information efficiency and manipulation. We estimate managerial media connection by using the BoardEx database, and apply standard OLS regression, mediation analysis, propensity score matching, 2-SLS instrumental variable regressions, and difference-in-difference regressions to test the two alternate hypothesis. Consistent with the manipulation hypothesis, our results suggest …