Firm disclosure, media, and the capital markets

Timely and accurate corporate information is essential for financial market efficiency. Decreasing information asymmetry between insiders and the public contributes to better investment decisions. Numerous studies examined the extent to which asset prices change in response to the arrival of new information in the market. Here we portray the picture that emerges from literature regarding the impact of information on cost of equity, liquidity, and trading volume. We focus on the source of information (firm disclosure vs. external entities), and we differentiate between pricing-relevant and pricing-irrelevant information (the former is related to a firm’s future prospects) and between hard and soft information. Further, we refer to the impact of news stories depending on their sentiment, and we examine the impact of printed publications versus online media. We also discuss the mere effect of the amount of disseminated information, regardless of its content.