Determinants and consequences of firms' perception by investors, consumers, and executives

The way firms are perceived internally and externally is relevant in many domains. For instance, the degree of investor attention can have an impact on the firm’s stock market valuation, as can the representation of the firm in the news media. Moreover, the perception of the quality of a firm’s products by consumers determines sales, while the reputation of the firm among employees can have an effect on its ability to hire and retain qualified staff. In this dissertation, I investigate determinants and consequences of the perception of firms in all of these settings

Determinants and consequences of firms’ perception by investors, consumers, and executives

The way firms are perceived internally and externally is relevant in many domains. For instance, the degree of investor attention can have an impact on the firm’s stock market valuation, as can the representation of the firm in the news media. Moreover, the perception of the quality of a firm’s products by consumers determines sales, while the reputation of the firm among employees can have an effect on its ability to hire and retain qualified staff. In this dissertation, I investigate determinants and consequences of the perception of firms in all of these settings

Advertising, Attention, and Financial Markets

Using daily advertising data, we analyze the short-term effects of advertising on investor attention and on financial market outcomes. Based on various investor attention proxies, we show that advertising positively affects attention. However, it has only little impact on turnover and liquidity. Most importantly, short-term stock returns are not significantly influenced by advertising. Further results suggest that previous findings of an economically significant positive relation between advertising and returns are due to reverse causality. Thus, the belief that stock prices can be temporarily inflated via advertising is misguided.Peer reviewe

A friendly turn - Advertising bias in the news media

This paper investigates whether newspapers report more favorably about advertising corporate clients than about other firms. Our identification strategy based on high-dimensional fixed effects and high frequency advertising data shows that advertising leads to more positive press coverage. This advertising bias in reporting is found among local and national newspapers. Further results show that advertising bias manifests particularly in less negative reporting after bad news events such as negative earnings surprises or extremely negative stock returns. Our findings cast doubt on the independence of the press from corporate pressure and hint at important information frictions