The study examines the effects of executives’ media connection on corporate
policies. Extant literature in finance, economics and journalism provide inconclusive
evidence in determining whether media works as watchdog to the financial market or
whether media facilitates bias through manipulation of corporate news events. I introduce
two competing hypotheses that may explain the research question. Information Efficiency
Hypothesis predicts that media connected firms mitigate information asymmetry among
its investors, enjoy better governance, and are less likely to manipulate information on
corporate policy choices. Manipulation Hypothesis, in contrary, suggests that firms may
strategically utilize media connections to alter the information flow that may paint a
tainted picture of the firm’s prospects, thereby facilitating greater misvaluation and
devising of opportunistic corporate finance policies. I test these hypotheses on a set of
investment policies (mergers outcomes and innovative efficiency) and financing policies
(seasoned equity offerings and share repurchases). In the first essay, I find that media connection increases merger announcement
return, reduces takeover premium, increases the likelihood of deal completion, although
post-merger long term performance exhibit inconclusive results. Also, media connection
reduces innovative efficiency and change in innovative efficiency attributable to media
connections is harmful for the firm in the long run. Overall, results are consistent with the
manipulation hypothesis to some extent though further investigation is required before
disregarding the information efficiency effect.
In the second essay, results show that media connection increases the likelihood
of an SEO event, reduces the announcement period CAR. However, analysis of post SEO
long term operating and stock performance show mixed results. For repurchasing firms,
media connection increases announcement returns, increases the likelihood of repurchase
and the amount repurchased. Media connection also increases the likelihood that
repurchase is preferred over dividends as a mode of payout. Post repurchase long term
operating and stock performance, however, provide inconsistent results. In general,
results are consistent with the manipulation hypothesis though information efficiency
hypothesis could not be ruled out entirely. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2018. / FAU Electronic Theses and Dissertations Collection
| Identifer | oai:union.ndltd.org:fau.edu/oai:fau.digital.flvc.org:fau_40726 |
| Contributors | Hossain, Md Miran (author), Javakhadze, David (Thesis advisor), Florida Atlantic University (Degree grantor), College of Business, Department of Finance |
| Publisher | Florida Atlantic University |
| Source Sets | Florida Atlantic University |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation, Text |
| Format | 195 p., application/pdf |
| Rights | Copyright © is held by the author, with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder., http://rightsstatements.org/vocab/InC/1.0/ |
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