Media Uncertainty and Risk-Taking

50 Pages Posted: 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: July 24, 2018

Abstract

This study investigates the association between media uncertainty and a comprehensive set of corporate decision-making measures that capture firm, investment, and financial risk. We report evidence that CEOs and firms who attract greater media uncertainty are more risk-seeking. Media uncertainty is positively associated with future stock return volatility, more risky investment and higher financial risk. However, media uncertainty is associated with lower capital expenditure and reduced free cash flow. Our findings are robust to endogeneity concerns and further tests, thereby supporting the role of media as an external mechanism for monitoring firm risk-taking activities.

Keywords: Media uncertainty; Firm risk; Investment and financial risk; Risk-seeking activities

JEL Classification: G31; G32; G34

Suggested Citation

Huang, Jiexiang and Roberts, Helen and Tan, Eric K. M., Media Uncertainty and Risk-Taking (July 24, 2018). Available at SSRN: https://ssrn.com/abstract=3220853 or http://dx.doi.org/10.2139/ssrn.3220853

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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