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

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Author Info

  • Marco GAMBARO

    ()

  • Riccardo PUGLISI

    ()

Abstract

We match data on the daily newspaper coverage of a sample of Italian listed companies with Nielsen data on the monthly amount of advertising that a given company has purchased on a given newspaper. Controlling for newspaper and company fixed effects, we show that newspaper coverage of a given company is positively related with the amount of ads purchased on that newspaper by that company. We also find that coverage of a company is higher the day after a press release, but especially so on newspapers where more ads are purchased. This result on press releases is robust to controlling for ownership links between newspapers and companies, and –more generally- controlling for time invariant features of each company-newspaper pair, i. e. for (company × newspaper) fixed effects. Moreover, coverage is correlated with past day absolute return and trading volume, and this relationship appears to be steeper for those newspapers where more ads are purchased.

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Bibliographic Info

Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2009-36.

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Date of creation: 09 Dec 2009
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Handle: RePEc:mil:wpdepa:2009-36

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Keywords: Media bias; advertising; press releases; stock returns; Italian press;

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References

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  1. Marco GAMBARO, 2004. "The evolution of public service television, methods of financing and implications for the consumer," Departmental Working Papers 2004-02, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  2. Ruben Durante & Brian Knight, 2009. "Partisan Control, Media Bias, and Viewer Responses: Evidence from Berlusconi's Italy," NBER Working Papers 14762, National Bureau of Economic Research, Inc.
  3. Riccardo Puglisi & Valentino Larcinese & James Snyder, 2007. "Partisan bias in economic news: evidence on the agenda-setting behavior of U.S. newspapers," ULB Institutional Repository 2013/10401, ULB -- Universite Libre de Bruxelles.
  4. Timothy Besley & Andrea Prat, 2005. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," STICERD - Political Economy and Public Policy Paper Series 07, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  5. Brad M. Barber & Terrance Odean, 2008. "All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors," Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 785-818, April.
  6. Lily Fang & Joel Peress, 2009. "Media Coverage and the Cross-section of Stock Returns," Journal of Finance, American Finance Association, vol. 64(5), pages 2023-2052, October.
  7. Rafael Di Tella & Ignacio Franceschelli, 2009. "Government Advertising and Media Coverage of Corruption Scandals," NBER Working Papers 15402, National Bureau of Economic Research, Inc.
  8. Paul C. Tetlock, 2007. "Giving Content to Investor Sentiment: The Role of Media in the Stock Market," Journal of Finance, American Finance Association, vol. 62(3), pages 1139-1168, 06.
  9. Gustavo Grullon, 2004. "Advertising, Breadth of Ownership, and Liquidity," Review of Financial Studies, Society for Financial Studies, vol. 17(2), pages 439-461.
  10. Jeffrey Milyo & Tim Groseclose, 2005. "A Measure of Media Bias," Working Papers 0501, Department of Economics, University of Missouri, revised 25 Aug 2005.
  11. Umit G. Gurun & Alexander W. Butler, 2012. "Don't Believe the Hype: Local Media Slant, Local Advertising, and Firm Value," Journal of Finance, American Finance Association, vol. 67(2), pages 561-598, 04.
  12. Brian G. Knight & Chun-Fang Chiang, 2008. "Media Bias and Influence: Evidence from Newspaper Endorsements," NBER Working Papers 14445, National Bureau of Economic Research, Inc.
  13. Matthew Gentzkow & Edward L. Glaeser & Claudia Goldin, 2004. "The Rise of the Fourth Estate: How Newspapers Became Informative and Why It Mattered," NBER Working Papers 10791, National Bureau of Economic Research, Inc.
  14. Riccardo Puglisi & James M. Snyder, Jr., 2008. "Media Coverage of Political Scandals," NBER Working Papers 14598, National Bureau of Economic Research, Inc.
  15. Owen Lamont & Andrea Frazzini, 2007. "The Earnings Announcement Premium and Trading Volume," NBER Working Papers 13090, National Bureau of Economic Research, Inc.
  16. Matthew Ellman & Fabrizio Germano, 2009. "What do the Papers Sell? A Model of Advertising and Media Bias," Economic Journal, Royal Economic Society, vol. 119(537), pages 680-704, 04.
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Citations

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Cited by:
  1. Friebel, Guido & Heinz, Matthias, 2012. "Media Slant Against Foreign Owners: Downsizing," IZA Discussion Papers 6859, Institute for the Study of Labor (IZA).
  2. Fabrizio Germano & Martin Meier, 2010. "Concentration and self-censorship in commercial media," Discussion Papers 1518, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Gans, Joshua S. & Leigh, Andrew, 2011. "How Partisan is the Press? Multiple Measures of Media Slant," IZA Discussion Papers 6156, Institute for the Study of Labor (IZA).
  4. A. Blasco & P. Pin & F. Sobbrio, 2011. "Paying Positive to Go Negative: Advertisers' Competition and Media Reports," Working Papers wp772, Dipartimento Scienze Economiche, Universita' di Bologna.
  5. Rafael Di Tella & Ignacio Franceschelli, 2011. "Government Advertising and Media Coverage of Corruption Scandals," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 119-51, October.
  6. Prat, Andrea & Strömberg, David, 2011. "The Political Economy of Mass Media," CEPR Discussion Papers 8246, C.E.P.R. Discussion Papers.
  7. A. Blasco & F. Sobbrio, 2011. "Competition and Commercial Media Bias," Working Papers wp767, Dipartimento Scienze Economiche, Universita' di Bologna.

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