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How firms respond to external valuation: Evidence from the monitoring role of media

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  • Rong Gong

Abstract

This study explores how media evaluations affect corporate capital investments. I show that media evaluations of firms affect corporate capital investments via the reputation mechanism, that is, a more negative media evaluation of the firm will motivate managers to give up inefficient investments. Meanwhile, a higher quantity of news underlying news evaluation and good firm performance strengthen the positive effect of media evaluation on corporate investments, whereas a higher level of divergence of news evaluation weakens the positive effect of media evaluation on corporate investments.

Suggested Citation

  • Rong Gong, 2023. "How firms respond to external valuation: Evidence from the monitoring role of media," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4657-4681, December.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:4:p:4657-4681
    DOI: 10.1111/acfi.13111
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