Categories: OLD Media Moves

Study: Negative media coverage helps big banks gain business

Negative media coverage actually helped these banks gain business in the lucrative field of managing IPOs, according to research by Thomas Roulet at the University of Cambridge.

Writing for Barron’s, Roulet explains, “Although negative media coverage may turn general public opinion against big banks, the clients of investment banks leading IPOs are hardly members of the mass public. Instead, the business executives who hire investment banks to lead IPOs as book runners usually share the professional values of the bankers criticized in negative press coverage.

“In other words, general public opinion and the media frown upon banks distributing bonuses while being bailed out, but for corporate clients this signals an affinity to the core values of the investment banking field. In the study, I term this an ‘adherence to professional norms’—to explain in academic terms how perception of behavior differs depending on audiences—but it’s not much different from a technologist refusing to alter his clothes as a sign of how hard he works, or an artist pushing the edges of taste to show how avant-garde he is.

“My study looks at 3,503 IPOs between 2007 and 2011, analyzing press coverage of those banks in three top U.S. daily newspapers—the Wall Street Journal, New York Times and Washington Post—on 28 investment banks which together represent nearly 90% of invitations to be book runners.”

Read more here.

Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.