Managers' and Investors' Responses to Media Exposure of Board Ineffectiveness

50 Pages Posted: 6 May 2005

See all articles by Henock Louis

Henock Louis

Pennsylvania State University - Smeal College of Business

Jennifer R. Joe

University of Delaware - Accounting & MIS

Dahlia Robinson

Arizona State University - School of Accountancy

Multiple version iconThere are 2 versions of this paper

Date Written: September 2007

Abstract

We analyze the impact of the press on the behavior of various economic agents by examining how media exposure of board ineffectiveness affects corporate governance, investor trading behavior, and security prices. The results suggest that media releases of (noisy) information have significant economic consequences. In particular, media exposure of board ineffectiveness forces the targeted agents to take corrective actions and enhances shareholder wealth. Individual investors appear to react negatively to the media exposure whereas investment firms act as if they anticipate the targeted firms' corrective actions.

Keywords: corporate governance, investor trading behavior, media, public exposure

JEL Classification: G34, G14, G12

Suggested Citation

Louis, Henock and Joe, Jennifer R. and Robinson, Dahlia, Managers' and Investors' Responses to Media Exposure of Board Ineffectiveness (September 2007). Available at SSRN: https://ssrn.com/abstract=714501 or http://dx.doi.org/10.2139/ssrn.714501

Henock Louis (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802-3306
United States
814-865-4160 (Phone)
814-863-8393 (Fax)

Jennifer R. Joe

University of Delaware - Accounting & MIS ( email )

Alfred Lerner College of Business and Economics
Newark, DE 19716
United States

Dahlia Robinson

Arizona State University - School of Accountancy ( email )

Tempe, AZ 85287
United States

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