Media coverage and debt financing choice

Document Type

Article

Publication Date

3-1-2024

Abstract

Extant literature has established the roles of media coverage in the financial system as an important information source and an integrated part of corporate governance, often through its substitution effects with other mechanisms. However, in this study, we utilize negative news sentiment to demonstrate how media coverage can also complement other governance devices, such as private debt and concentrated equity ownership. Firms facing negative news are riskier and require greater monitoring, thus necessitating the complementarity of multiple governance mechanisms to circumvent the negative attributes of firms seeking external debt financing.

Publication Source (Journal or Book title)

Journal of Accounting and Public Policy

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