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Media Coverage and Labor Investment Efficiency: Evidence from China*

Media Coverage and Labor Investment Efficiency: Evidence from China* 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia-Pacific Journal of Financial Studies Wiley

Media Coverage and Labor Investment Efficiency: Evidence from China*

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Publisher
Wiley
Copyright
© 2022 Korean Securities Association
ISSN
2041-9945
eISSN
2041-6156
DOI
10.1111/ajfs.12408
Publisher site
See Article on Publisher Site

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.

Journal

Asia-Pacific Journal of Financial Studies – Wiley

Published: Feb 1, 2023

Keywords: Media coverage; Labor investment efficiency; Labor cost stickiness; Machine learning; M41; M51

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