Does media coverage affect credit rating change decisions?

H. Kent Baker, Shantanu Dutta, Samir Saadi and Ligang Zhong

Journal of Banking & Finance, 2022, vol. 145, issue C

Abstract: We examine whether media coverage affects credit rating change decisions by analyzing 732,426 newspaper items published by top U.S. media outlets on S&P 1500 firms. Our results show that negative media coverage has a strong association with credit rating change events, but positive media coverage does not. We find support for two channels that confirm this finding: the media's fundamental information content and the media's reputational pressure. Credit rating agencies appear to consider the fundamental information embedded in negative media coverage and recognize negative market sentiment when making rating change decisions.

Keywords: Media coverage; Credit rating; Credit rating change; Reputational capital (search for similar items in EconPapers)
JEL-codes: D43 G14 G24 L14 L15 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:145:y:2022:i:c:s0378426622002473

DOI: 10.1016/j.jbankfin.2022.106667

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