Disseminating Misinformation through Business Press

In this paper, we examine the effect of disseminating misinformation through business press. While prior literature on the role of business presses focuses on disseminating information in the capital markets, business press also disseminates misinformation. Using aggressive non-GAAP earnings as a proxy for misinformation, we find that stronger initial market reaction to aggressive non-GAAP earnings when business press covers non-GAAP earnings. However, stronger initial market reaction for aggressive non-GAAP earnings covered by business press experiences subsequent reversal after the earnings announcements, suggesting that business press coverage may exacerbate mispricing when managers have incentives to mislead investors. Our findings provide important insights on the current debate on the role of business press in the capital markets