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

Abstract

This paper provides empirical evidence that media coverage of CEOs, a channel of investor recognition, signi¯cantly increases¯rm 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% per year, respectively, in abnormal stock returns. Media coverage also impacts CEO rent extraction through compensation. Subsequent total pay rise is 4.1% above and beyond what CEOs obtain from the increase in¯rm value that arises due to media coverage.

Should I Stay or Should I Go? Founder Power and Exit via Initial Public Offering

“…Another way for entrepreneurs to acquire prestige power is to gain popularity through the media (Porter & Sallot, 2005), thus becoming figureheads for their firms (Trevino et al, 1990). Therefore, we captured a founder's prestige power using two proxies: number of directorships in other firms during the five years before the IPO (consistent with Finkle, 1998;Higgins & Gulati, 2003) and media coverage (Nguyen, 2015). We selected a five-year window for the number of directorships because this figure is reported in IPO prospectuses and is visible to investment audiences and because prestige from a directorship is not ephemeral (compared to the number of current directorships) but has a lasting impact.…”

What do ads buy? Daily coverage of listed companies on the Italian press

“…16 On the company side, private incentives of top managers can also play a significant role. Since the information ends up being mixed with entertainment and being personalized in stories and adventures, top managers receive an extra media exposure and can transform the company investment into private benefits such as salaries, stock options and future positions (Nguyen, 2015). 17 This figure is in line with other European countries, while in the U.S. advertising share is generally 80-85% of the total.…”

Does CEO media exposure affect corporate social responsibility?

“…Thus, CEO media exposure can be perceived as a signal of their abilities and their involvement in the management and success of the company (Blankespoor & deHaan, ), and it tends to be positively associated with other personal characteristics, such as credibility or integrity, as well as with their reputation in general (Hayward et al, ; Hayward & Hambrick, ; Park & Berger, ). Previous articles have demonstrated that CEO media exposure significantly influences the reputation and image of companies (Love et al, 2107), improving the financial opportunities available to them (Ranft et al, ) and increasing their visibility (Lee, ) and value created (Nguyen, ). However, it is also necessary to consider that wide CEO media exposure can generate an excessive link between the CEO's reputation and the company, putting the latter in a position of vulnerability in the face of potential negative decisions and behaviours by the former (Bruijns, ).…”