The Media Goes Where It is Needed: The Relation Between the Investor Base and Media Coverage
The figure presents the difference between media coverage of treatment and control firms before and after loan origination by a block holder. Treated firms have dual-holders investors i.e. the institutional investors who provided a loan to the firm. When an equity investor becomes a dual-holder, they obtain increased access to management and privileged information. Thus, their demand for monitoring and information from the public sources such as media likely decreases after the loan is issued. After loans from dual-holders are originated, the media coverage of treated firms is 9% lower relative to the media coverage of control firms. Interestingly, the treatment effect takes a few quarters to fully manifest, as evidenced by the insignificant estimates for quarters 1 and 2. We believe this delay is intuitive because it likely takes some time for (1) institutional investors to set up monitoring capabilities (e.g., request, receive, and analyze private information from firms) and (2) the media to become aware of the existence of a dual-holder and the resulting shift in monitoring and demand for news.