Negative Media Tone and Leverage Adjustments

This paper examines how negative publicity influences firms’ capital structure decision. We find that firms exhibit faster adjustment of capital structure toward the target level after more negative media coverage, advocating the monitoring role of negative media sentiment on corporate behaviors. Fu...

Full description

Saved in:
Bibliographic Details
Published inKorean Journal of Financial Studies Vol. 53; no. 2; pp. 249 - 275
Main Authors Park, Sohee, Cho, Hyungjin, Cho, Meeok
Format Journal Article
LanguageEnglish
Published 한국증권학회 01.04.2024
Subjects
경영학
Partial Adjustment Model
External Monitoring
Leverage Adjustment Speed
부정적인 언론보도
외부 감시
자본구조조정속도
Capital Structure
부분조정모형
자본구조
Negative Media Tone
Online AccessGet full text
ISSN2005-8187
2713-5543
DOI10.26845/KJFS.2024.04.53.2.249

Cover

More Information
Summary:This paper examines how negative publicity influences firms’ capital structure decision. We find that firms exhibit faster adjustment of capital structure toward the target level after more negative media coverage, advocating the monitoring role of negative media sentiment on corporate behaviors. Further, our finding is significantly stronger for non-chaebol firms. Additional analyses show that the monitoring role is stronger when firms are more scrutinized by outsiders and have better corporate governance. Overall, this paper shows evidence that negative media sentiment could play an effective role in monitoring firms’ capital structure and correcting their inefficiencies.
ISSN:2005-8187
2713-5543
DOI:10.26845/KJFS.2024.04.53.2.249