Does the Media Spotlight Burn or Spur Innovation?

Review of Accounting Studies, Forthcoming

83 Pages Posted: 19 Sep 2017 Last revised: 18 Jul 2020

See all articles by Lili Dai

Lili Dai

University of New South Wales (UNSW)

Rui Shen

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics; Shenzhen Finance Institute

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen

Date Written: March 13, 2020

Abstract

We examine the effect of media coverage on firm innovation. Using a comprehensive sample of corporate news coverage and patenting activities over the period from 2000 to 2012, we find a negative relation between media coverage and firm innovation. We further document the two offsetting economic mechanisms underlying the impact of media coverage on innovation: the media’s role of short-term pressure on managers is negatively related to innovation, while its role of mitigating financial constraints is positively associated with innovation. Our findings provide new insights into the effect of news coverage on firms’ long-term growth.

Keywords: Media coverage, Firm innovation, Managerial myopia, Financial constraint

JEL Classification: G14, G32, O31

Suggested Citation

Dai, Lili and Shen, Rui and Zhang, Bohui, Does the Media Spotlight Burn or Spur Innovation? (March 13, 2020). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3037838 or http://dx.doi.org/10.2139/ssrn.3037838

Lili Dai (Contact Author)

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

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

Rui Shen

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics ( email )

2001 Longxiang Road, Longgang District
Shenzhen, 518172
China

Shenzhen Finance Institute ( email )

Bohui Zhang

The Chinese University of Hong Kong, Shenzhen ( email )

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