Media Coverage and Labor Investment Efficiency: Evidence from China. (5th February 2023)

• Record Type: Journal Article
• Authors: Liu, Jin; Li, Tingwei; Wang, Lei
• Is Part Of: Asia-Pacific journal of financial studies. Volume 52:Number 1(2023)
• Page Start: 116
• Page End: 152
• Publication Date: 2023-02-05
• Subjects: Media coverage -- Labor investment efficiency -- Labor cost stickiness -- Machine learning; M41 -- M51; Pacific Area -- Economic conditions -- Periodicals; Finance -- Asia -- Periodicals; Finance -- Pacific Area -- Periodicals; Asia -- Economic conditions -- Periodicals; 332.09505
• DOI: 10.1111/ajfs.12408
• Languages: English
• ISSNs: 2041-9945

Abstract

Abstract: Using 2.09 million pieces of media coverage associated with Chinese firms during 2006–2019, we find a significantly positive relationship between media coverage and labor investment efficiency. Both newspaper and online media coverage can effectively reduce firms' labor over‐investment and under‐investment. Our results are robust after addressing a range of endogeneity concerns. Further analyses show that the positive relationship between media coverage and labor investment efficiency is more pronounced for firms with higher labor cost stickiness or when human capital is more important to the firm's business model. Mechanism analyses reveal that media coverage improves labor investment efficiency through the compensation incentive mechanism, supervision mechanism, and information disclosure mechanism.