Information Production and Translation of Legalese : The Media’s Role in Impounding Price Information from Case Filings

It is unclear how investors can quickly impound information from litigation filings given frictions to obtain the filings and interpret their complex legalese. However, specialized media members have expertise and ability to obtain filings and report on their content. We isolate the media’s information production and translation roles by examining market reactions (1) after filings but before complaints are available through the PACER system and (2) based on whether there is filing date media coverage. We find a significant market reaction—using absolute abnormal returns and trading volume—to litigation with media coverage, and minimal reaction to litigation without it. We also find an immediate reaction to the initial litigation-related article for firms using intraday stock prices. Results appear driven by the media reducing investor integration costs by making filings more understandable, not awareness or acquisition costs. Overall, results show that the media is critical in creating litigation information