Price of Publicity
Umit G. Gurun
University of Texas at Dallas
January 15, 2014
Board members with mass media experience influence firms' media coverage and media slant. After accounting for the endogeneity of having media experts on board using geographic variation in the location of media experts as an instrument, we find that firms with a media expert receive 40% more media coverage. Furthermore, articles written about them include 25% fewer negative words compared with articles on control firms. Although firms with media experts enjoy these benefits, they suffer from an illiquidity discount of 20bp/month. These findings highlight the importance of composition of board of directors as a determinant of information disclosure mechanism.
Number of Pages in PDF File: 44
Keywords: Media, Investor Relations, Connections, Corporate Board
JEL Classification: G10, G12, G14, G34, M41, M43, L82working papers series
Date posted: October 19, 2009 ; Last revised: February 1, 2014
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