What do Ads Buy? Daily Coverage of Listed Companies on the Italian Press

Abstract

We match data on the daily newspaper coverage of a sample of Italian listed companies with Nielsen data on the monthly amount of advertising that a given company has purchased on a given newspaper. Controlling for newspaper and company fixed effects, we show that newspaper coverage of a given company is positively related with the amount of ads purchased on that newspaper by that company. We also find that coverage of a company is higher the day after a press release, but especially so on newspapers where more ads are purchased. This result on press releases is robust to controlling for ownership links between newspapers and companies, and - more generally - controlling for time invariant features of each company-newspaper pair, i.e. for (company × newspaper) fixed effects.

Moreover, coverage is correlated with past day absolute return and trading volume, and this relationship appears to be steeper for those newspapers where more ads are purchased.

Keywords: Media Bias, Advertising, Press Releases, Stock Returns, Italian Press

JEL Classification: K1, L2, N81