New Research Study Finds Causal Relationship Between News Dissemination and Capital Markets Benefits

 Business Wire’s deep-seated belief that the dissemination of price-sensitive information over a recognized newswire enhances transparency is no secret. Sure, we take a lot of flack from so-called unbiased industry bloggers for our opinion, but the fact remains: the newswire is not only the most efficient and transparent method of disclosure, it is arguably the most cost-effective segment of the entire financial reporting supply-chain.

Our public stance on full and fair disclosure is nothing new. Back in 2000, just after Regulation FD went into effect, Business Wire was the first newswire to eliminate the 15-minute distribution delay to the financial community. Prior to this time the media received releases minutes before the financial community. More recently Business Wire has taken a strong stand on whether or not Web postings should constitute “disclosure.”

Research seems to indicate that Business Wire is correct in its thinking. After earlier reports citing a correlation between frequent public disclosure and share price stability comes new research indicating a definite causal relationship between news dissemination and capital market benefits.

Eugene Soltes, a doctoral candidate at the University of Chicago Booth School of Business, analyzed more than 9.3 million news releases from the post-Reg FD period and found a statistically significant relationship between greater dissemination of company-generated news and benefits including lower bid-ask spread, increased trading volume and lower idiosyncratic volatility.

According to Soltes, “Greater dissemination of firm news has the opportunity to broaden a firm’s base by attracting investors that were not previously familiar with the firm. The more broadly information is diffused to investors, the more investors who will be aware of this information. Consequently, greater dissemination of firm news is hypothesized to lower information asymmetry (and, by extension, a firm’s bid-ask spread).”

Interestingly, Soltes’ research finds causality: better liquidity and a lower cost of capital are not just statistically related to greater news dissemination, but are a direct result.

This is precisely why Business Wire has worked so hard to help you bring your news not just to investors here in the US, but around the world as well. The wire today is truly ubiquitous. Today we can disseminate your news to the financial community in just about any market, not to mention global retail investors via thousands of popular news and information sites. We also enable clients to meet regulatory requirements in more markets worldwide simultaneously than any other newswire service

Our full suite of investor relations options – including expert XBRL consulting – is yet another opportunity to lower corporate cost of capital and capture liquidity in the global marketplace.

We look forward to hearing your comments below.

-Michael Becker, VP, Global Disclosure and Financial Reporting Services, Business Wire

Michael leads Business Wire’s Investor Relations, Regulatory Filing and XBRL teams. He serves on the NIRI/NY board andthe XBRL-US steering committee and can be reached at 212-752-9600, ext. 1312 or

3 Responses to New Research Study Finds Causal Relationship Between News Dissemination and Capital Markets Benefits

  1. […] Soltes. Shortly after this I came across responses to the study by Michael Becker/Business Wire who posted a response that positions the study as endorsement of their services and Anne Snider/IR Magazine who used the study to write another post on her opinion that web […]

  2. Hi Michael,

    I was able to read through the study in detail and just recently posted a response to it on our blog The interesting thing I found is that “news dissemination” as defined in the study is based on the effect of repeating and transmitting the same piece of information through the business press. For example, when the WSJ writes an article about a firm’s earnings, part of the information distributed by that article is strictly the disseminated news (the other part is new information). The degree to which this is measured in the study is based on the number of articles created by the business press from a company issuing a press release.

    It seems clear the study supports the concept that simply being included in the press newswire feed does not provide the capital market benefits outlined in the study – what matters is how much your news is written about, shared and discussed.

    In today’s world it seems that this dissemination effect is largely taking place through the social web rather than through the traditional business press. I included a study from 2007 in this regard in my recent post. (still looking for more recent research)

    Best regards,


  3. […] Wired on the subjects of disclosure and transparency, including the causal relationship between increased communication and capital market benefits.  Looks like there’s even more evidence for transparency being good for companies’ […]

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