When Home Pride Meets Professional Integrity: Journalists’ Strategic Reporting about Hometown Firms under Misconduct Investigations

This study investigates how journalists navigate conflicting social identity demands, specifically the tension between hometown loyalty and professional objectivity, when they report on firms facing financial misconduct investigations. We find that, following the investigation announcement, journalists born in the firm’s headquarter city (i.e., home journalists) exhibit a decreased propensity to report on the implicated firm. However, conditional on the coverage decision, they employ a subtle framing strategy to deflect public attention from the scandal without explicitly violating professional codes of conduct. In particular, home journalists become more positive in their reporting on aspects of the firm unrelated to the misconduct, while maintaining a similar level of coverage of the misconduct itself compared to non-home journalists. This positivity is more pronounced among journalists with stronger hometown identification, but is mitigated by professional reputation concerns. Furthermore, their coverage hinders market price discovery regarding misconduct severity. These findings provide novel evidence on the influence of social identity conflicts on journalistic behavior and its market consequences.