| Abstract: |
Share repurchases attract negative media attention. We examine whether the level of media exposure of a firm impacts its share repurchase activity and find that higher media exposure is associated with a lower likelihood and level of share repurchases. We corroborate the evidence by exploiting media outlet closures and continue to find a negative association between media exposure and share repurchase activities. The results are concentrated among larger firms and firms with greater stakeholder concerns relating to labor and government. The results are also concentrated during years with greater public anti-business sentiment, as well as greater media and public attention on share repurchases. We document that firms are particularly sensitive to the exposure of left-leaning media outlets. Firms with higher media exposure shift to less contentious forms of payouts (i.e., dividends) but do not change the level of total payouts. Among firms that continue with share repurchases, higher media exposure results in a lower likelihood of announcing a share repurchase plan and a lower announced plan size. Our evidence suggests that firms alter share repurchase activity to minimize media-imposed reputational costs.
Keywords: media; share repurchases; reputational costs
JEL classification: D25; G35; M40; O16
Data availability: All data are available from public sources identified in the paper.
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Biography:
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Susan Shu earned her M.S. and Ph.D. from the University of Rochester. Her research interests include corporate disclosure, media, social media, enforcement, security litigation, insider trading, initial public offerings, and economics of auditor-client alignments. Her research has appeared in leading academic journals such as Journal of Accounting and Economics, Journal of Financial Economics, and Journal of Accounting Research. In 2014 Professor Shu received the prestigious Notable Contributions to Accounting Literature Award from the American Accounting Association for her (coauthored) paper "Do Managers Withhold Bad News?"
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