More coverage in the financial media meant higher stock prices for the companies covered, according to a study from a University of Cambridge professor.
Andrew Hill of the Financial Times writes, “Quantity was more important than quality: it did not seem to matter whether the news about the boss was good or bad as long as there was a lot of it.
“Alas, the study may encourage zealous PRs to push their leaders more aggressively into the media. It also gives corporate leaders a perverse personal incentive to court publicity. Celebrity CEOs’ total pay was 4.1 per cent higher than the amount they would have received merely as a result of the increased share price.
“Mr Nguyen’s data set ends in the year Rakesh Khurana called the top of the market for imperial chief executives with his book Searching for a Corporate Savior, which analysed the ‘cult of the charismatic CEO’.
“The unanswered question in this latest study is whether the ‘more news is good news’ effect still applies. Mr Nguyen says it does, because investors continue to use the profile of the chief executive to help assess the large companies’ credibility.”
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