The effect of media-linked directors on financing and external governance

Alberta Di Giuli and Paul A. Laux

Journal of Financial Economics, 2022, vol. 145, issue 2, 103-131

Abstract: Firms sharing a board member with a media company receive more news coverage. This in turn affects those firms’ financing choices: they issue more bonds, rely less on bank loans, and have lower blockholder ownership. These findings are consistent with media coverage acting as an external governance mechanism that substitutes for monitoring by banks and equity blockholders. The effect of media-linked directors on financing is evident in panel and time series analyses and using two different instrumental variable analyses, suggesting a causal relation.

Keywords: Media; Boards of directors; Financing policy; External governance (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:145:y:2022:i:2:p:103-131

DOI: 10.1016/j.jfineco.2021.07.017

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