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Home | Events Archive | The Value of Visibility
Seminar

The Value of Visibility


  • Series
    Erasmus Finance Seminars
  • Speaker(s)
    Alexander Hillert (Goethe University Frankfurt, Germany)
  • Field
    TI Finance
  • Location
    Erasmus University, Polak Building, Room 2-20
    Rotterdam
  • Date and time

    December 03, 2019
    15:30 - 16:45

Abstract

We analyze the relation between firm visibility and stock returns, using a novel dataset on New York Times coverage of U.S. firms from 1924 to 2013. We find that firms with persistently higher levels of media coverage exhibit predictably higher returns. Top-quintile outperform bottom-quintile coverage stocks by 2.64% per year (Sharpe Ratio of 0.47, Momentum: 0.47). Higher media coverage predicts significant improvements in corporate governance, as well as higher sales growth and profitability growth. Thus, the evidence is consistent with visibility creating value through monitoring and advertising, while stock markets inadequately price the positive effects of firm visibility.