Can old sin make new shame? Stock market reactions to the release of movies re-exposing past corporate scandals

Le Kang, Han Jiang, Ziye Zoe Nie and Hui Zhou

Finance Research Letters, 2024, vol. 67, issue PA

Abstract: We study stock market reactions to the release of movies that re-expose past publicly known corporate scandals. Using a sample of 54 event firms featured in 23 movies, we find that these firms have significantly persistent negative abnormal returns following the movie releases. We posit that such negative reactions are associated with the adverse public perception of the firms induced by the scandal re-exposing movies. Consistent with this hypothesis, we find more pronounced negative abnormal returns for the firms featured in the more popular movies. Moreover, the event firms experience increased implied costs of capital following the movie releases.

Keywords: Event study; Corporate scandals; Media; Cost of capital (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pa:s1544612324007852

DOI: 10.1016/j.frl.2024.105755

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