Is More News Good News? Media Coverage of CEOs, Firm Value, and Rent Extraction

Quarterly Journal of Finance 05 (04), December 2015, pages 1-38.

35 Pages Posted: 7 Jun 2006 Last revised: 15 Mar 2016

See all articles by Bang Dang Nguyen

Bang Dang Nguyen

University of Cambridge Judge Business School

Date Written: January 28, 2015

Abstract

This paper provides empirical evidence that media coverage of CEOs, a channel of investor recognition, significantly increases firm value, measured by Tobin’s q. The result is robust to alternative econometric methods and checks of causality. Firms with the highest level of CEO media coverage and positive coverage outperform those with the lowest levels by 8 and 7 percent per year, respectively, in abnormal stock returns. Media coverage also impacts CEO rent extraction through compensation. Subsequent total pay rise is 4.1 percent above and beyond what CEOs obtain from the increase in firm value that arises due to media coverage.

Keywords: Media Coverage of CEO, Firm Value, Firm Valuation, CEO Compensation, Rent Extraction, Corporate Governance, CEOs, Investor Recognition Hypothesis

JEL Classification: G30, G39, G12, G14, G3, G11

Suggested Citation

Nguyen, Bang Dang, Is More News Good News? Media Coverage of CEOs, Firm Value, and Rent Extraction (January 28, 2015). Quarterly Journal of Finance 05 (04), December 2015, pages 1-38. . Available at SSRN: https://ssrn.com/abstract=800746 or http://dx.doi.org/10.2139/ssrn.800746

Bang Dang Nguyen (Contact Author)

University of Cambridge Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 122 376 0470 (Phone)
+44 1223 339701 (Fax)

HOME PAGE: http://www.jbs.cam.ac.uk/research/faculty/nguyenbd.html

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