Friends in Media : Implications of Media Connections for Analyst Forecast Optimism

We investigate the effect of corporate executives’ connections with financial media on analyst forecast optimism. We propose two hypotheses on the impact of financial media connections: information efficiency and manipulation. Consistent with the manipulation hypothesis, our results suggest that corporate executives use media connections to exacerbate analyst forecast optimism. Mediation analysis suggests that media connections are related to not only more news coverage but also more positive news sentiment. We further find that managerial incentives and board monitoring moderates the relationship between media connections and analyst forecast optimism