Media coverage and corporate payout policy
Institution: | University of New South Wales |
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Department: | Banking & Finance |
Year: | 2014 |
Keywords: | Corporate finance; Media coverage; Dividend policy |
Record ID: | 1074271 |
Full text PDF: | http://handle.unsw.edu.au/1959.4/53799 |
Using a sample combining various datasets over the period 2000 to 2012, this paper examines the relationship between media coverage and payout policy in US public firms. I find that media coverage is negatively associated with a firms likelihood of paying dividends and positively associated with the decisions to cut and omit dividends. Firms with high media coverage also have a lower level of dividend smoothing. These findings are based on a relatively representative sample and persist after accounting for contemporaneous repurchasing activities, different combinations of firm characteristic control variables, and industry, time and firm fixed effects. Moreover, I also find that investors react less negatively to the dividend cut announcements of high coverage firms. Overall, my results suggest that, as higher media coverage attracts more potential investors to a stock, managers become less conservative regarding dividend policy.