Those multiple business news stories you’re reading about company earnings might not be as diverse as they appear, according to new research that suggests media ownership concentration could be slowing down financial markets’ ability to process information.
A comprehensive study examining nearly 290,000 articles about earnings announcements reveals that news outlets owned by the same media companies often present similar coverage of financial events, potentially affecting how quickly markets respond to new information.
“The key takeaway is that you might be subscribing to 10 newspapers or online news websites, but the information you’re getting might be pretty similar, and all those sources happen to be owned by a common media company,” says Flora Sun, assistant professor of accounting at Binghamton University’s School of Management.
The research, published in The Accounting Review, analyzed coverage from 34 major media outlets involving 4,462 public companies between 2007 and 2019. The study found that outlets under common ownership tend to use similar language and tone when reporting on the same events.
The implications extend beyond journalism into market efficiency. Researchers found that this similarity in coverage appears to slow the speed at which stock prices incorporate new information, as fewer diverse perspectives are available to help markets reach efficient pricing.
“We could see how the market could be affected by such similar coverage since the speed at which the stock price incorporates new information is getting slower. This is because we do not have diverse enough opinions to offset each other and try to achieve a very efficient price in the end,” Sun explains.
The trend toward similar content appears driven by economic pressures on news organizations. The study found that shared content becomes more prevalent among outlets with high audience reach, suggesting media companies have increased incentives to share content across their properties.
While the findings might seem concerning, Sun emphasizes balance in interpreting the results. “It’s important to remember that this research isn’t saying the media is always biased. We’re just demonstrating how investors should be aware of this scenario that exists in today’s media landscape.”
The research team noted that many market participants likely don’t realize when seemingly unrelated media outlets share ownership, as these connections aren’t always obvious to readers.
The study was a collaboration between researchers from Binghamton University, Indiana University, Harvard Business School, and Texas A&M University, offering a comprehensive look at how media ownership patterns affect financial information dissemination in modern markets.