The power of the business media: Evidence from firm-level productivity

We examine the impact of media coverage on firm-level productivity and find that firms with higher media coverage are associated with higher productivity. Using the launch of Barron's Online as a quasi-shock to media coverage, we document that this relationship is causal. Further exploration shows that the positive media-productivity relationship is stronger for firms with weaker governance mechanisms and for those with higher levels of information asymmetry. We also identify an increase in reputational and career concerns and a reduction in managerial shirking as channels through which media coverage affects firm-level productivity. The results are robust to alternative explanations and endogeneity concerns. Overall, our findings suggest that media coverage reduces managerial opportunism, and thus enhances resource deployment decisions.