Do CEOs Use the Media for Reputation Management?

Abstract

This study aims to investigate whether CEOs use the media as a strategic tool to manage and enhance reputation. This is pursued by examining the tendency of CEOs to provide interviews to the financial press as a reaction to past, present, and future events that influence their reputation.
The tendency of CEOs to give press interviews is examined as a function of a set of proxies that are used for gauging CEOs’ reputations: CEO tenure, press coverage, being a CEO appointed from inside/outside of the firm, and firm performance during CEO tenure.

The results of this paper reveal that the timing of CEOs’ decisions to give interviews is not random and provides evidence that is consistent with the notion that CEOs use the media as a strategic tool to manage and enhance reputation.

The author shows that interviews tend to follow positive firm performance, and tend to precede extremely negative firm performance. This behavior is more pronounced for CEOs with lower initial reputation. In addition, low future performance motivates CEOs to give more interviews in advance, which could be an attempt to influence investors' expectations.

The paper sheds new light on the selective usage of the media for shaping public perceptions. This study has practical value for both regulators and investors by virtue of analyzing information that is provided via the media.

Keywords: Reputation, Media, Voluntary disclosures, Financial press, CEOs, Textual analysis

JEL Classification: D82, D83, G14, G18, G30