Media Coverage and Corporate Risk-Taking: International Evidence

Employing a large sample of 12,454 firms across 40 countries from 2001 to 2014, we find that firms with high media coverage tend to take risky but value-enhancing investments. We further show that this positive relation is achieved through three plausible channels, namely, the information asymmetry channel, the capital-at-risk channel, and the business strategy channel, and is enhanced in countries with strong shareholder protection and transparent information environments. Our main conclusions remain valid after carefully taking endogeneity issues into account and conducting various robustness tests. This study sheds new light on the real effects of media in mitigating risk-related agency conflicts.