Review of Accounting Studies

, Volume 23, Issue 1, pp 1–36 | Cite as

Capital market effects of media synthesis and dissemination: evidence from robo-journalism

  • Elizabeth BlankespoorEmail author
  • Ed deHaan
  • Christina Zhu


In 2014, the Associated Press (AP) began using algorithms to write 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. The effects are most likely driven by retail traders. 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 into the implications of automated journalism for market efficiency.


Media Synthesis Dissemination Automation Trading volume Liquidity 

JEL classifications

G12 G14 M41 



We thank Mary Barth, Mark Bradshaw (discussant), John Campbell (discussant), Kimball Chapman, Stefan Huber, Charles Lee, Roby Lehavy (discussant), Russell Lundholm (editor), Sarah McVay, Greg Miller, Hal White, an anonymous referee, and participants at the 2016 Stanford Summer Camp, 2016 UBCOW Conference, 2016 HKUST Accounting Symposium, 2017 FARS Midyear Meeting, University of Wisconsin, and the 2017 UC Davis Accounting Conference for helpful suggestions. We are sincerely grateful to the Associated Press for its extensive support. We thank Christina Maimone for programming assistance and Shauna Bligh and Mae Bethel for research assistance. Financial support was provided by the Stanford Graduate School of Business and University of Washington Foster School of Business. All errors are our own. Additional analyses mentioned in this paper can be found in the internet appendix.

Supplementary material

11142_2017_9422_MOESM1_ESM.docx (282 kb)
ESM 1 (DOCX 281 kb)


  1. Barber, B. M., & Odean, T. (2008). All that glitters: The effect of attention and news on the buying behavior of individual and institutional investors. Review of Financial Studies, 21(2), 785–818.CrossRefGoogle Scholar
  2. Battalio, R., Corwin, S. A., & Jennings, R. (2016). Can brokers have it all? On the relation between make-take fees and limit order execution quality. The Journal of Finance, 71(5), 2193–2238.CrossRefGoogle Scholar
  3. Bertrand, M., Duflo, E., & Mullainathan, S. (2004). How much should we trust differences-in-differences estimates? Quarterly Journal of Economics, 119(1), 249–275.CrossRefGoogle Scholar
  4. Blankespoor, E. (2016). The impact of information processing costs of firm disclosure choice: Evidence from the XBRL mandate. Working paper.Google Scholar
  5. Blankespoor, E., Miller, G. S., & White, H. D. (2014). The role of dissemination in market liquidity: Evidence from firms’ use of twitter. The Accounting Review, 89(1), 79–112.CrossRefGoogle Scholar
  6. Bloomfield, R. J. (2002). The “incomplete revelation hypothesis” and financial reporting. Accounting Horizons, 16(3), 233–243.CrossRefGoogle Scholar
  7. Boehmer, E., Jones, C. M., & Zhang, X. (2016). Tracking retail investor activity. Working paper.Google Scholar
  8. Bushee, B. J., Core, J. E., Guay, W., & Hamm, S. J. (2010). The role of the business press as an information intermediary. Journal of Accounting Research, 48(1), 1–19.CrossRefGoogle Scholar
  9. Bushman, R. M., Smith, A. J., & Wittenberg-Moerman, R. (2010). Price discovery and dissemination of private information by loan syndicate participants. Journal of Accounting Research, 48(5), 921–972.CrossRefGoogle Scholar
  10. Butler, M., Kraft, A., & Weiss, I. S. (2007). The effect of reporting frequency on the timeliness of earnings: The cases of voluntary and mandatory interim reports. Journal of Accounting and Economics, 43(2), 181–217.CrossRefGoogle Scholar
  11. Cohen, L., & Lou, D. (2012). Complicated firms. Journal of Financial Economics, 104(2), 383–400.Google Scholar
  12. Dai, L., Parwada, J., & Zhang, B. (2015). The governance effect of the media’s news dissemination role: Evidence from insider trading. Journal of Accounting Research, 53(2), 331–366.CrossRefGoogle Scholar
  13. De Chaisemartin, C., & d’Haultfoeuille, X. (2015). Fuzzy differences-in-differences. Working paper.Google Scholar
  14. deHaan, E., Shevlin, T., & Thornock, J. (2015). Market (in) attention and the strategic scheduling and timing of earnings announcements. Journal of Accounting and Economics, 60(1), 36–55.CrossRefGoogle Scholar
  15. deHaan, E., Madsen, J., & Piotroski, J. D. (2017). Do weather-induced moods affect the processing of earnings news?. Journal of Accounting Research, 55(3), 509–550.Google Scholar
  16. Diamond, D. W., & Verrecchia, R. E. (1991). Disclosure, liquidity, and the cost of capital. The Journal of Finance, 46(4), 1325–1359.CrossRefGoogle Scholar
  17. Dougal, C., Engelberg, J., Garcia, D., & Parsons, C. A. (2012). Journalists and the stock market. Review of Financial Studies, 25(3), 639–679.CrossRefGoogle Scholar
  18. Drake, M. S., Guest, N. M., & Twedt, B. J. (2014). The media and mispricing: The role of the business press in the pricing of accounting information. The Accounting Review, 89(5), 1673–1701.CrossRefGoogle Scholar
  19. Drake, M. S., Thornock, J. R., & Twedt, B. J. (2017). The internet as an information intermediary. Review of Accounting Studies, 25(2), 543–576.Google Scholar
  20. Easley, D., & O’Hara, M. (1992). Time and the process of security price adjustment. The Journal of Finance, 47(2), 577–605.CrossRefGoogle Scholar
  21. Engelberg, J. E., & Parsons, C. A. (2011). The causal impact of media in financial markets. The Journal of Finance, 66(1), 67–97.CrossRefGoogle Scholar
  22. Factset. (2017). Narrative Science and FactSet Unveil Alliance for Investment Management Firms. Accessed 22 Feb 2017.
  23. Fang, L., & Peress, J. (2009). Media coverage and the cross-section of stock returns. The Journal of Finance, 64(5), 2023–2052.CrossRefGoogle Scholar
  24. Fang, L. H., Peress, J., & Zheng, L. (2014). Does media coverage of stocks affect mutual funds’ trading and performance? Review of Financial Studies, 27(12), 3441–3466.CrossRefGoogle Scholar
  25. Finley, K. (2015). In the Future, Robots will write news that’s all about you. Wired. Accessed 22 Feb 2017.
  26. Grossman, S. J., & Stiglitz, J. E. (1980). On the impossibility of informationally efficient markets. The American Economic Review, 70(3), 393–408.Google Scholar
  27. Gurun, U. G., & Butler, A. W. (2012). Don't believe the hype: Local media slant, local advertising, and firm value. The Journal of Finance, 67(2), 561–598.CrossRefGoogle Scholar
  28. Harris, L. (2015). Trading and electronic markets: What investment professionals need to know. Research Foundation Publications, 2015(4), 1–79.Google Scholar
  29. Hirshleifer, D., & Teoh, S. H. (2003). Limited attention, information disclosure, and financial reporting. Journal of Accounting and Economics, 36, 337–386.CrossRefGoogle Scholar
  30. Hirshleifer, D., Lim, S. S., & Teoh, S. H. (2009). Driven to distraction: Extraneous events and underreaction to earnings news. The Journal of Finance, 64(5), 2289–2325.CrossRefGoogle Scholar
  31. Holden, C. W., & Jacobsen, S. (2014). Liquidity measurement problems in fast, competitive markets: Expensive and cheap solutions. The Journal of Finance, 69(4), 1747–1785.CrossRefGoogle Scholar
  32. Huberman, G., & Regev, T. (2001). Contagious speculation and a cure for cancer: A nonevent that made stock prices soar. The Journal of Finance, 56(1), 387–396.Google Scholar
  33. Kwan, A., Masulis, R., & McInish, T. H. (2015). Trading rules, competition for order flow and market fragmentation. Journal of Financial Economics, 115(2), 330–348.CrossRefGoogle Scholar
  34. Lecompte, C. (2015). Automation in the newsroom. Nieman Reports. Accessed 22 Feb 2017.
  35. Lee, C. M., Mucklow, B., & Ready, M. J. (1993). Spreads, depths, and the impact of earnings information: An intraday analysis. Review of Financial Studies, 6(2), 345–374.CrossRefGoogle Scholar
  36. Li, E. X., Ramesh, K., & Shen, M. (2011). The role of newswires in screening and disseminating value-relevant information in periodic SEC reports. The Accounting Review, 86(2), 669–701.CrossRefGoogle Scholar
  37. Mathieson, S. A. (2015). Natural language generation progresses from robo-journalism to finance. Accessed 1 Aug 2016.
  38. Merton, R. C. (1987). A simple model of capital market equilibrium with incomplete information. The Journal of Finance, 42(3), 483–510.CrossRefGoogle Scholar
  39. Miller, G. S. (2006). The press as a watchdog for accounting fraud. Journal of Accounting Research, 44(5), 1001–1033.CrossRefGoogle Scholar
  40. Miller, G. S., & Skinner, D. J. (2015). The evolving disclosure landscape: How changes in technology, the media, and capital markets are affecting disclosure. Journal of Accounting Research, 53(2), 221–239.CrossRefGoogle Scholar
  41. Odean, T. (1998). Volume, volatility, price, and profit when all traders are above average. The Journal of Finance, 53, 1887–1934.CrossRefGoogle Scholar
  42. Peress, J. (2014). The media and the diffusion of information in financial markets: Evidence from newspaper strikes. The Journal of Finance, 69(5), 2007–2043.CrossRefGoogle Scholar
  43. Roberts, M. R., & Whited, T. M. (2013). Endogeneity in empirical corporate finance. Handbook of the Economics of Finance, 2, 493–572.CrossRefGoogle Scholar
  44. Rogers, J. L., Skinner, D. J., & Zechman, S. L. (2016). The role of the media in disseminating insider-trading news. Review of Accounting Studies, 21, 711–739.CrossRefGoogle Scholar
  45. Tetlock, P. C. (2010). Does public financial news resolve asymmetric information? Review of Financial Studies, 23(9), 3520–3557.CrossRefGoogle Scholar
  46. Tetlock, P. C. (2011). All the news that's fit to reprint: Do investors react to stale information? Review of Financial Studies, 24(5), 1481–1512.CrossRefGoogle Scholar
  47. Twedt, B. (2016). Spreading the word: Price discovery and newswire dissemination of management earnings guidance. The Accounting Review, 91(1), 317–346.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Graduate School of BusinessStanford UniversityStanfordUSA
  2. 2.Foster School of BusinessUniversity of WashingtonSeattleUSA

Personalised recommendations