Media Coverage and Corporate Risk-Taking: International Evidence

Posted: 21 Jul 2020

See all articles by Weidong Xu

Weidong Xu

Zhejiang University - School of Management

Xin Gao

Zhejiang University - School of Management

Zhe An

Monash Business School

Donghui Li

Shenzhen University - College of Economics

Date Written: June 28, 2020

Abstract

Employing a large sample of 12,454 firms across 40 countries from 2001 to 2014, we find that firms with high media coverage tend to take risky but value-enhancing investments. We further show that this positive relation is achieved through three plausible channels, namely, the information asymmetry channel, the capital-at-risk channel, and the business strategy channel, and is enhanced in countries with strong shareholder protection and transparent information environments. Our main conclusions remain valid after carefully taking endogeneity issues into account and conducting various robustness tests. This study sheds new light on the real effects of media in mitigating risk-related agency conflicts.

Keywords: Corporate Risk-Taking; News Coverage; Media

JEL Classification: G32, G34

Suggested Citation

Xu, Weidong and Gao, Xin and An, Zhe and Li, Donghui, Media Coverage and Corporate Risk-Taking: International Evidence (June 28, 2020). Available at SSRN: https://ssrn.com/abstract=3637468

Weidong Xu

Zhejiang University - School of Management ( email )

Hangzhou, Zhejiang Province 310058
China

Xin Gao

Zhejiang University - School of Management ( email )

Hangzhou, Zhejiang Province 310058
China

Zhe An

Monash Business School

Wellington Road
Clayton, Victoria 3168
Australia

Donghui Li (Contact Author)

Shenzhen University - College of Economics

5th Floor, Wenke Building
3688 Nanhai Road
Shenzhen, Guangdong 518060
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
689
PlumX Metrics