Is More News Good News? Media Coverage of CEOs, Firm Value, and Rent Extraction

Bang Dang Nguyen ()
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Bang Dang Nguyen: University of Cambridge Judge Business School, Finance and Accounting Group, Cambridge CB2 1AG, United Kingdom

Quarterly Journal of Finance (QJF), 2015, vol. 05, issue 04, 1-38

Abstract: This paper provides empirical evidence that media coverage of CEOs, a channel of investor recognition, significantly increases firm value, measured by Tobin’s q. The result is robust to alternative econometric methods and checks of causality. Firms with the highest level of CEO media coverage and positive coverage outperform those with the lowest levels by 8% and 7% per year, respectively, in abnormal stock returns. Media coverage also impacts CEO rent extraction through compensation. Subsequent total pay rise is 4.1% above and beyond what CEOs obtain from the increase in firm value that arises due to media coverage.

Keywords: Media coverage of CEO; firm value; CEO compensation; rent extraction; corporate governance (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (20)

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DOI: 10.1142/S2010139215500202

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