Who Owns the Pen? Institutional Investors’ Influence on Media during Corporate Litigation
73 Pages Posted: 21 May 2020 Last revised: 28 Aug 2022
Date Written: August 28, 2022
Institutional investors increasingly own equity blocks of media companies that complement holdings in industrial firms. When industrial firms become defendants of corporate litigation, these institutions nudge media companies they simultaneously blockhold to provide more lenient coverage about the defendants. Doing so props up market sentiment and mitigates negative price impact – benefiting institutions’ portfolios. This strategy is more prominent when institutions are activists and pay closer attention to litigation events. Following the lenient coverage, institutions gradually exit positions in troubled defendant firms and begin to vote more favorably toward the media’s management. Overall, media outlets seem to slant their coverage of corporate litigation to cater to their large shareholders.
Keywords: Institutional investors, media incentives, media tone, corporate litigation
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