| The study examines the effects of executives' media connection on corporate policies. Extant literature in finance, economics and journalism provide inconclusive evidence in determining whether media works as watchdog to the financial market or whether media facilitates bias through manipulation of corporate news events. I introduce two competing hypotheses that may explain the research question. Information Efficiency Hypothesis predicts that media connected firms mitigate information asymmetry among its investors, enjoy better governance, and are less likely to manipulate information on corporate policy choices. Manipulation Hypothesis, in contrary, suggests that firms may strategically utilize media connections to alter the information flow that may paint a tainted picture of the firm's prospects, thereby facilitating greater misvaluation and devising of opportunistic corporate finance policies. I test these hypotheses on a set of investment policies (mergers outcomes and innovative efficiency) and financing policies (seasoned equity offerings and share repurchases).;In the first essay, I find that media connection increases merger announcement return, reduces takeover premium, increases the likelihood of deal completion, although post-merger long term performance exhibit inconclusive results. Also, media connection reduces innovative efficiency and change in innovative efficiency attributable to media connections is harmful for the firm in the long run. Overall, results are consistent with the manipulation hypothesis to some extent though further investigation is required before disregarding the information efficiency effect.;In the second essay, results show that media connection increases the likelihood of an SEO event, reduces the announcement period CAR. However, analysis of post SEO long term operating and stock performance show mixed results. For repurchasing firms, media connection increases announcement returns, increases the likelihood of repurchase and the amount repurchased. Media connection also increases the likelihood that repurchase is preferred over dividends as a mode of payout. Post repurchase long term operating and stock performance, however, provide inconsistent results. In general, results are consistent with the manipulation hypothesis though information efficiency hypothesis could not be ruled out entirely. |
