Redrawing the line: Narrowly beating analyst forecasts and journalists’ co-coverage choices in earnings-related news articles

Do journalists use editorial tools to help investors clarify uncertain earnings performance? This study examines this question in the context of WSJ reporters’ co-coverage choices. Using narrowly beating consensus analyst forecasts as a proxy for earnings evaluation uncertainty, I find that journalists tend to co-cover peers that are more economically related to the announcing firm when it reported earnings that narrowly beat consensus analyst forecasts (“beaters”) than when discussing the earnings of non-beaters. Using intra-day data, I further find that stock investors appear to use the co-covered peers as a benchmark to evaluate the earnings of the beaters but not the earnings of the non-beaters. These findings highlight the usefulness of media’s editorial content to investors.