Download This PaperDoes Greater Public Scrutiny Hurt a Firm's Performance?
Fisher College of Business Working Paper No. 2023-03-001
Charles A. Dice Center Working Paper No. 2023-01
European Corporate Governance Institute – Finance Working Paper No. 873/2023
HKU Jockey Club Enterprise Sustainability Global Research Institute - Archive
82 Pages Posted: 12 Jan 2023 Last revised: 23 Jan 2023
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Does Greater Public Scrutiny Hurt a Firm's Performance?
Does Greater Public Scrutiny Hurt a Firm's Performance?
Date Written: January 9, 2023
Abstract
Public attention to a firm may provide valuable monitoring, but it may also have a dark side by constraining management’s decisions and distracting it. We use inclusion in the S&P 500 index as a positive shock to public attention. Media coverage, Google searches, SEC downloads, SEC comment letters, shareholder proposals, analyst coverage, and lawsuits increase following inclusion. Post-inclusion performance falls and is negatively related to the increase in attention. Included firms’ investment and payout policies become more similar to those of index peers and the increase in similarity is positively related to the size of the attention increase.
Keywords: Public attention, S&P 500 index addition, analyst coverage, investment, dividends, share repurchases
JEL Classification: G24, G31, G32, G35
Suggested Citation: Suggested Citation
Rene M. Stulz (Contact Author)
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
European Corporate Governance Institute (ECGI)
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium