Does Friends with Pen Matter for Corporate Finance Policies: Evidence from Share Repurchases
Presentation
Overview
Overview
Description
This paper examines the effect of corporate executives’ social ties with media personnel on share repurchase events. We find that media connection is associated with higher announcement returns and more negative news and negative sentiment prior to repurchase announcements. Furthermore, we find that the effect of media connection on announcement return is greater for firms with high option exercise value. Overall, our findings are consistent with the information manipulation hypothesis, which contends that managers exploit their media connections as a strategic tool to manipulate soft information and successfully devise price depression prior to repurchase announcements. Our results are robust to a battery of robustness and endogeneity tests.
