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

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  • Bang Dang Nguyen

    (University of Cambridge Judge Business School, Finance and Accounting Group, Cambridge CB2 1AG, United Kingdom)

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% 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 firm value that arises due to media coverage.

Suggested Citation

  • Bang Dang Nguyen, 2015. "Is More News Good News? Media Coverage of CEOs, Firm Value, and Rent Extraction," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 5(04), pages 1-38, December.
    • Handle: RePEc:wsi:qjfxxx:v:05:y:2015:i:04:n:s2010139215500202
    DOI: 10.1142/S2010139215500202
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