Media Connections and Seasoned Equity Offerings
Presentation
Overview
Overview
Description
We present evidence that corporate connections to the media are associated with a greater SEO likelihood, more negative announcement returns, and poorer long-term performance. The effect of media connections on announcement returns is more pronounced for firms with higher information asymmetry, greater financial constraints, and lower advertising expenditures. Media connections are positively associated with media coverage and sentiment prior to the SEO announcements. Our findings are consistent with the notion that SEO issuers use their connections with media firms as a strategic tool to manipulate soft information and successfully inflate their equity value in the short term.
