Does the Media Spotlight Burn or Spur Innovation?
Review of Accounting Studies, Forthcoming
83 Pages Posted: 19 Sep 2017 Last revised: 18 Jul 2020
Date Written: March 13, 2020
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: Suggested Citation