Media Coverage and the Cost of Debt

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

3 Scopus Citations
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Original languageEnglish
Pages (from-to)429-471
Journal / PublicationJournal of Financial and Quantitative Analysis
Volume55
Issue number2
Online published8 Jan 2019
Publication statusPublished - Mar 2020

Abstract

This paper investigates the relation between media coverage and offering yield spreads using a comprehensive dataset of 5,338 industrial bonds issued from 1990 to 2011. We find that media coverage is negatively associated with firms’ cost of debt. This association is robust to controlling for standard yield determinants, different model specifications, and endogeneity. We identify 4 economic channels through which media coverage influences the cost of debt: Information asymmetry, governance, liquidity, and default risk. Importantly, media coverage has an independent influence beyond the effects of these economic mechanisms and is not a proxy for other firm attributes.

Citation Format(s)

Media Coverage and the Cost of Debt. / Gao, Haoyu; Wang, Junbo; Wang, Yanchu; Wu, Chunchi; Dong, Xi.

In: Journal of Financial and Quantitative Analysis, Vol. 55, No. 2, 03.2020, p. 429-471.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal