The Role of Media on CEO Power and Firm Performance

66 Pages Posted: 31 Oct 2017 Last revised: 27 Jul 2018

See all articles by Jiexiang Huang

Jiexiang Huang

University of Otago - Department of Accountancy and Finance

Helen Roberts

University of Otago - Department of Accountancy and Finance

Eric K. M. Tan

University of Queensland - Business School

Date Written: February 27, 2018

Abstract

This study investigates the role of media tone on CEO power and firm value. Using CEO pay slice (CPS) as a measure of CEO power, we find that negative media tone is associated with a reduction in the change in CEO power. We also find that firm performance can be explained by the interaction effects of positive media tone and the change in CEO power. Similarly, we report that media favourability together with changes in CEO power is positively related to firm performance. Consistent with the theoretical predictions, we find a positive association between negative tone and the CEO risk-taking incentives, and a negative association between media favourability and the CEO risk-taking incentives. The evidence suggests that media tone plays a role in corporate governance through the dissemination of news.

Keywords: Media Tone; CEO Power; Corporate Governance; Firm Performance; Risk-taking Incentives

JEL Classification: G32, G34, J33

Suggested Citation

Huang, Jiexiang and Roberts, Helen and Tan, Eric K. M., The Role of Media on CEO Power and Firm Performance (February 27, 2018). 9th Conference on Financial Markets and Corporate Governance (FMCG) 2018. Available at SSRN: https://ssrn.com/abstract=3062235 or http://dx.doi.org/10.2139/ssrn.3062235

Jiexiang Huang (Contact Author)

University of Otago - Department of Accountancy and Finance ( email )

PO Box 56
Dunedin, 9054
New Zealand

Helen Roberts

University of Otago - Department of Accountancy and Finance ( email )

PO Box 56
Dunedin, 9054
New Zealand
6434798072 (Phone)
6434798171 (Fax)

Eric K. M. Tan

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

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