Tournament-based incentives and media sentiment |
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| Institution: | 1. College of Business and Economics, Australian National University, Australia;2. UQ Business School, The University of Queensland, Australia;3. Peter T. Paul College of Business and Economics, University of New Hampshire, USA;4. University of South Australia, Australia;1. Deakin University, 221 Burwood Hwy, Burwood, Victoria 3125, Australia;2. Sunway University, 5, Jalan Universiti, Bandar Sunway, 47500 Petaling Jaya, Selangor, Malaysia;1. HKU Business School, the University of Hong Kong, Pokfulam Road, Hong Kong Special Administrative Region;2. Sauder School of Business, University of British Columbia, Vancouver, BC, Canada;1. College of Business, Hankuk University of Foreign Studies, South Korea;2. Department of Management, Korea National Open University, South Korea;3. Department of Business Administration, Sejong University, South Korea;4. Department of Business Administration, Inha University, South Korea;1. Graduate School of Science in Taxation, University of Seoul, 163 Seoulsiripdaero, Dongdaemun-gu, Seoul 02504, Republic of Korea;2. School of Business Administration, Chonnam National University, 77, Yongbong-ro, Buk-gu, Gwangju 61186, Republic of Korea;1. Department of Business Administration, National Chung Cheng University, Taiwan;2. Department of Economics, National Chengchi University, Taiwan |
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| Abstract: | We find that promotion-based tournament incentives of executives are positively associated with firms’ media sentiment. This effect is more pronounced among firms with greater need for media favourability, captured by higher information opacity, lower analyst coverage, lower industry homogeneity, lower investment sentiment and lower managerial ability. Furthermore, we identify better financial performance and higher corporate branding as two channels through which tournament incentives can enhance a firm’s positive media sentiment. Our results are also robust to two quasi-natural experiments affecting promotion-based tournaments – (a) an exogenous CEO turnover due to health issues or sudden CEO death, and (b) the implementation of Say-on-Pay (SOP) law. Overall, our findings indicate that tournament-based incentives encourage a firm’s executives to showcase their skills to broader stakeholders, which consequently increases a firm’s media image. |
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| Keywords: | Tournament-based incentives Media sentiment Promotion-based tournament Corporate branding |
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