Who Owns the Pen? Institutional Investors’ Influence on Media during Corporate Litigation

73 Pages Posted: 21 May 2020 Last revised: 28 Aug 2022

See all articles by Jie He

Jie He

University of Georgia - Department of Finance

Han Xia

University of Texas at Dallas - Naveen Jindal School of Management

Yabo Zhao

University of Texas at Dallas, Naveen Jindal School of Management, Department of Finance

Luo Zuo

Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: August 28, 2022

Abstract

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

Suggested Citation

He, Jie and Xia, Han and Zhao, Yabo and Zuo, Luo, Who Owns the Pen? Institutional Investors’ Influence on Media during Corporate Litigation (August 28, 2022). Available at SSRN: https://ssrn.com/abstract=3584740 or http://dx.doi.org/10.2139/ssrn.3584740

Jie He

University of Georgia - Department of Finance ( email )

B318 Amos Hall
Terry College of Business, University of Georgia
Athens, GA 30602-6253
United States

Han Xia (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Yabo Zhao

University of Texas at Dallas, Naveen Jindal School of Management, Department of Finance ( email )

800 West Campbell
Richarson, TX 75080
United States

Luo Zuo

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

349 Sage Hall
Ithaca, NY 14853
United States
607-255-4002 (Phone)

HOME PAGE: http://www.johnson.cornell.edu/faculty-research/faculty/lz352/

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