Media coverage and investment efficiency |
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| Institution: | 1. Department of Accounting and Information Technology, National Chung Cheng University, Taiwan, ROC;2. Department of Accounting, National Taiwan University, Taiwan, ROC;1. School of Accounting, ZheJiang University of Finance & Economics, Hangzhou 310018, Zhejiang, China;2. Academy of Green Food Science of Heilongjiang, Northeast Agricultural University, Haerbin 150030, Heilongjiang, China |
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| Abstract: | We examine the effect of media coverage on firm-level investment efficiency. We find that media coverage reduces under-investment but increases over-investment. The negative effect of media coverage on under-investment is more pronounced in firms affected by greater information asymmetry and poorer corporate governance. The positive effect of media coverage on over-investment is driven by media-induced CEO overconfidence. Additional results show that both investment- and non-investment-related news coverage decrease under-investment, while non-investment-related news coverage is more influential in increasing over-investment. In general, higher news optimism is associated with less under-investment but more over-investment. Moreover, media coverage affects investment efficiency through its information dissemination rather than information creation function. Collectively, our results suggest that firms’ media visibility promotes more over-investment than under-investment. |
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| Keywords: | Media coverage Investment efficiency Information asymmetry Corporate governance CEO overconfidence |
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