The role of financial media in share repurchases

• Autor(a) principal: A. Pinto-Gutiérrez, Cristian
• Data de Publicação: 2016
• Tipo de documento: Artigo
• Idioma: eng; por
• Título da fonte: Revista Brasileira de Gestão de Negócios (Online)
• Texto Completo: https://rbgn.fecap.br/RBGN/article/view/2845
• topic: Investor attention; share repurchases; news analytics; media coverage.; Atenção dos investidores; anúncios de recompras de ações; análise de notícias; cobertura da mídia.

Purpose – This paper examines the impact that financial mediacoverage has on share repurchase outcomes in the U.S.Design/methodology/approach – I perform regression analysis toexamine how the volume of firm-specific news articles about theannouncements relates to firms’ decisions to actually repurchase sharesfollowing those announcements. I also examine the role of media in thefirms’ long-term post-announcements stock performances. To alleviateconcerns about confounding effects that can simultaneously drive boththe volume of news articles and share repurchase outcomes, I use aninstrumental variable approach.Findings – The results show that the levels of firm-specific media coverageat the time of repurchase announcements are negatively related to firms’actual repurchases following the announcements. Furthermore, theevidence shows that twelve months following repurchase announcements,the highest cumulative abnormal returns correspond to the firms withthe least media coverage. These results suggest that only those firms thatdo not attract sufficient investor attention to the announcements followthrough on their repurchase programs.Originality/value – This paper augments the literature on behavioralfinance by introducing and testing a firm-specific measure of investorattention by employing a newly available database of news articles from anews analytics provider. The paper also contributes to the sparse literaturethat examines the effects of investor attention on corporate events.