News Media Coverage and Corporate Leverage Adjustments

Research output: Contribution to journalArticle

  • Authors:
  • Tung Lam Dang
  • Viet Anh Dang
  • Fariborz Moshirian
  • Lily Nguyen
  • Bohui Zhang

Abstract

We examine the impact of the media on firms’ leverage adjustments. Using a comprehensive sample of global news across 33 countries, we find that greater news coverage and more positive news sentiment are associated with greater leverage adjustment speeds. This finding is consistent with the argument that media coverage and content help lower the cost of firms’ adjustment toward target leverage. We further find evidence supporting two mechanisms through which the news media affects leverage adjustments: information dissemination and monitoring. Overall, our results are consistent with the dynamic trade-off theory of capital structure.

Bibliographical metadata

Original languageEnglish
JournalJournal of Banking and Finance
Volumeforthcoming
Early online date12 Oct 2019
DOIs
Publication statusPublished - 2019

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