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Capital Market Effects of Media Synthesis and Dissemination: Evidence from Robo-Journalism

Author

Listed:
  • Blankespoor, Elizabeth

    (Stanford University)

  • deHaan, Ed

    (University of WA)

  • Zhu, Christina

    (Stanford University)

Abstract

In 2014, the Associated Press (AP) began using algorithms to write media articles about firms' earnings announcements. These "robo-journalism" articles synthesize information from firms' press releases, analyst reports, and stock performance, and are widely disseminated by major news outlets a few hours after the earnings release. The articles are available for thousands of firms on a quarterly basis, many of which previously received little or no media attention. We use AP's staggered implementation of robo-journalism to examine the effects of media synthesis and dissemination, in a setting where the articles are devoid of private information and are largely exogenous to the firm's earnings news and disclosure choices. We find compelling evidence that automated articles increase firms' trading volume and liquidity. We find no evidence that the articles improve or impede the speed of price discovery. Our study provides novel evidence on the impact of pure synthesis and dissemination of public information in capital markets, and initial insights on the implications of automated journalism for market efficiency.

Suggested Citation

  • Blankespoor, Elizabeth & deHaan, Ed & Zhu, Christina, 2017. "Capital Market Effects of Media Synthesis and Dissemination: Evidence from Robo-Journalism," Research Papers 3490, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3490
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    File URL: https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/428566
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    Cited by:

    1. Frank D. Hodge & Kim I. Mendoza & Roshan K. Sinha, 2021. "The Effect of Humanizing Robo‐Advisors on Investor Judgments," Contemporary Accounting Research, John Wiley & Sons, vol. 38(1), pages 770-792, March.
    2. Lawrence, Alastair & Ryans, James & Sun, Estelle & Laptev, Nikolay, 2018. "Earnings announcement promotions: A Yahoo Finance field experiment," Journal of Accounting and Economics, Elsevier, vol. 66(2), pages 399-414.
    3. Bhardwaj, Arti & Imam, Shahed, 2019. "The tone and readability of the media during the financial crisis: Evidence from pre-IPO media coverage," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 40-48.

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