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Does the media spotlight burn or spur innovation?

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  • Lili Dai

    (University of New South Wales)

  • Rui Shen

    (Chinese University of Hong Kong)

  • Bohui Zhang

    (Chinese University of Hong Kong)

Abstract

We examine the effect of media coverage on firm innovation. Using a comprehensive sample of corporate news coverage and patenting over the period from 2000 to 2012, we find a negative relation between media coverage and firm innovation. We further document the two offsetting economic mechanisms underlying the impact of media coverage on innovation: the media’s role of short-term pressure on managers relates negatively to innovation, while its role of mitigating financial constraints is positively associated with innovation. Our findings provide new insights into the effect of news coverage on firms’ long-term growth.

Suggested Citation

  • Lili Dai & Rui Shen & Bohui Zhang, 2021. "Does the media spotlight burn or spur innovation?," Review of Accounting Studies, Springer, vol. 26(1), pages 343-390, March.
    • Handle: RePEc:spr:reaccs:v:26:y:2021:i:1:d:10.1007_s11142-020-09553-w
    DOI: 10.1007/s11142-020-09553-w
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    20. Call, Andrew C. & Emett, Scott A. & Maksymov, Eldar & Sharp, Nathan Y., 2022. "Meet the press: Survey evidence on financial journalists as information intermediaries," Journal of Accounting and Economics, Elsevier, vol. 73(2).

    More about this item

    Keywords

    Media coverage; Firm innovation; Managerial myopia; Financial constraint;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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