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Corporate Misconduct, Media Coverage, and Stock Returns by Hee-Eun Kim; Hoje Jo; Tae-Wook Ahn; Junesuh Yi is a Economics, Econometrics and Finance article available to read on EtoBox.

What is Corporate Misconduct, Media Coverage, and Stock Returns about?

This study examines the impact of increased investor attention to corporate misconduct (CM) on stock returns. We show that media coverage provides an important channel through which investor awareness of corporate wrongdoings can be enhanced. Using a unique research setting in Korea based on text analysis during the 2008–2020 period, we find that investors exhibit short-term adverse reactions to CM events. More importantly, the increased social awareness of CM issues through media coverage leads investors to penalize firms more severely. We also find that the adverse reaction to CM events is more prominent for firms with a greater negative media tone and surprise. The combined evidence supports the investor attention theory. Furthermore, the negative effects of CM on stock returns are smaller for firms with positive Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) reputations, consistent with the insurance theory.

Who reads Corporate Misconduct, Media Coverage, and Stock Returns?

Author

Hee-Eun Kim; Hoje Jo; Tae-Wook Ahn; Junesuh Yi

Publisher

Elsevier BV

Published

2022

Language

EN

Field

Economics, Econometrics and Finance (Social Sciences)