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The Value of Visibility

60 Pages Posted: 12 Nov 2015 Last revised: 16 Mar 2017

Alexander Hillert

Goethe University Frankfurt - Department of Finance

Michael Ungeheuer

Aalto University School of Business

Date Written: March 2017

Abstract

We analyze the relation between firm visibility and stock returns, using a novel dataset on New York Times coverage of U.S. firms from 1924 to 2013. We find that firms with persistently higher levels of media coverage exhibit predictably higher returns. Top-quintile outperform bottom-quintile coverage stocks by 2.64% per year (Sharpe Ratio of 0.47, Momentum: 0.47). Higher media coverage predicts significant improvements in corporate governance, as well as higher sales growth and profitability growth. Thus the evidence is consistent with visibility creating value through monitoring and advertising, while stock markets inadequately price the positive effects of firm visibility.

Keywords: Media Coverage, Visibility, Returns, Corporate Governance, Profitability

JEL Classification: G12, G14

Suggested Citation

Hillert, Alexander and Ungeheuer, Michael, The Value of Visibility (March 2017). Available at SSRN: https://ssrn.com/abstract=2689652 or http://dx.doi.org/10.2139/ssrn.2689652

Alexander Hillert (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Grueneburgplatz 1
Frankfurt am Main, Hessen 60323
Germany

Michael Ungeheuer

Aalto University School of Business ( email )

P.O.Box 21220
Helsinki, 00076
Finland

HOME PAGE: http://sites.google.com/site/ungeheuermichael/

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