Working Paper: NBER ID: w30858
Authors: Benjamin Bennett; Ren M. Stulz; Zexi Wang
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: No keywords provided
JEL Codes: G24; G31; G32; G35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| S&P 500 inclusion (G12) | increased public attention (H84) |
| increased public attention (H84) | decreased firm performance (L25) |
| increased public attention (H84) | policy similarity (C52) |