We investigate the role of media freedom in the media’s effectiveness in improving a firm’s information environment. We find that when a U.S. multinational firm’s foreign product markets have less free media, there is a higher level of uncertainty in the financial market, as indicated by higher levels of analyst forecast dispersion, analyst forecast errors, and bid-ask spreads. The impact of foreign countries’ media freedom on U.S. firms’ analyst forecast dispersion and forecast errors is mitigated by foreign countries’ local research intensity. In addition, when a U.S. firm’s foreign markets have less free media, management earnings forecasts are issued less frequently and, if issued, are less timely, suggesting that media freedom affects the information available to even corporate insiders. Finally, the relation between foreign media freedom and U.S. firms’ information environments is not driven by foreign countries’ media penetration or macro-economic environments.

This study adds to research on the role of media in financial markets. Across countries, there is large variation in the freedom of media in information dissemination and creation. Our findings suggest that media freedom enhances the effectiveness of media in improving the corporate information environment. In addition, to our knowledge, our results represent the first findings on how the role of the media interacts with the roles of sell-side analysts and firm managers in shaping firms’ information environments.