In this study,we find that relative to firms with less media coverage,stock price sensitivity to positive(negative)earnings surprises in earnings announcements of firms with greater media coverage is stronger(weaker).This asymmetry in the effect of media coverage on stock price sensitivity to positive versus negative earnings surprises suggests that greater media coverage of earnings announcements intensifies stock price reactions to positive earnings surprises but attenuates reactions to negative earnings surprises.Moreover,we find that negative earnings news is less persistent for firms with greater media coverage.Overall,our findings support the conjecture that greater media coverage increases managers’incentive to avoid future negative news,thereby reducing the persistence of poor financial performance and weakening price reactions to negative earnings news.
This paper aims to investigate the effect of the characteristics of the internal audit function(IAF)on earnings management(EM)for a sample of 27 Tunisian listed companies.The authors employed the Correlated Panels Corrected Standard Errors model to estimate the regression equation.The results showed that EM is negatively associated with internal audit effectiveness,frequency of audit committee meetings with Chief Audit Executives(CAEs),the partial outsourcing of internal audit,and the firm’s size.Moreover,the authors found a positive relationship between EM and the use of IAF as a training ground for management and the private sector.This study is important to academics,regulators,and policymakers in introducing new governance reforms to strengthen the IAF as an important internal governance mechanism to reduce earnings management practices in emerging countries.The results also provide useful information for investors to examine the effect of internal audit characteristics on earnings management.
