Social Media's Impact on Financial Journalism: A New Era of News Reporting

The rise of social media has dramatically transformed the creation, dissemination, and consumption of information in capital markets. While prior research has shown that social media is a double-edged sword for information dissemination, no research so far has explored its impact on the origination of financial news in traditional media. This study investigates whether social media has altered the characteristics of financial journalism. We hypothesize that the increasing prevalence of social media prompts traditional media to adopt similar reporting styles, particularly in financial news. This mimicry leads to the premature release of shorter, less precise news articles that often lack thoroughly vetted sources and feature more sensational language. We attribute the influence of social media on traditional financial news to two interrelated factors: first, financial journalists and analysts increasingly rely on social media to track trending topics and identify newsworthy events, influencing their reporting content; second, as social media becomes a primary news outlet due to its brevity and engaging content, traditional media must compete for reader attention by adopting similar styles. This analysis focuses on merger and acquisition (M&A) rumors, a topic prone to speculative and sensational coverage. These rumors typically have definitive outcomes, allowing for precise measurement of news accuracy, and follow a distinct timeline, allowing us to examine the speed and timing of publication. This spontaneity means that news content cannot be prepared in advance, providing a unique opportunity to examine the authentic process of news generation. Overall, the research aims to investigate the evolving role of social media in shaping financial news, thereby enhancing our understanding of information flows in capital markets and offering valuable insights for market participants and regulators.