Don’t Believe the Hype: Local Media Slant, Local Advertising, and Firm Value

Don’t Believe the Hype: Local Media Slant, Local Advertising, and Firm Value

  • UMIT G. GURUN
  • ALEXANDER W. BUTLER

Article first published online: 27th March 2012 DOI: 10.1111/j.1540-6261.2012.01725.x

Abstract


When local media report news about local companies, they use fewer negative words compared to the same media reporting about nonlocal companies. We document that one reason for this positive slant is the firms' local media advertising expenditures. Abnormal positive local media slant strongly relates to firm equity values. The effect is stronger for small firms; firms held predominantly by individual investors; and firms with illiquid or highly volatile stock, low analyst following, or high dispersion of analyst forecasts. These findings show that news content varies systematically with the characteristics and conflicts of interest of the source.

Sign in to access the full article.

Related articles


Share Issuance and Factor Timing

  • ROBIN GREENWOOD
  • SAMUEL G. HANSON

Article first published online: 27th March 2012 / DOI: 10.1111/j.1540-6261.2012.01730.x

Read Article

MISCELLANEA

Article first published online: 27th March 2012 / DOI: 10.1111/j.1540-6261.2012.01731.x

Read Article

Rollover Risk and Credit Risk

  • ZHIGUO HE
  • WEI XIONG

Article first published online: 27th March 2012 / DOI: 10.1111/j.1540-6261.2012.01721.x

Read Article

Are Stocks Really Less Volatile in the Long Run?

  • ĽUBOŠ PÁSTOR
  • ROBERT F. STAMBAUGH

Article first published online: 27th March 2012 / DOI: 10.1111/j.1540-6261.2012.01722.x

Read Article

The Secondary Market for Hedge Funds and the Closed Hedge Fund Premium

  • TARUN RAMADORAI

Article first published online: 27th March 2012 / DOI: 10.1111/j.1540-6261.2012.01723.x

Read Article

Hedge Funds and Chapter 11

  • WEI JIANG
  • KAI LI
  • WEI WANG

Article first published online: 27th March 2012 / DOI: 10.1111/j.1540-6261.2012.01724.x

Read Article

Are you an Author?


Please read our submission requirements and find out how to submit your paper to the Journal of Finance

Submit a paper