Abstract
We study stock market reactions to the release of movies that re-expose past publicly known corporate scandals. Using a sample of 54 event firms featured in 23 movies, we find that these firms have significantly persistent negative abnormal returns following the movie releases. We posit that such negative reactions are associated with the adverse public perception of the firms induced by the scandal re-exposing movies. Consistent with this hypothesis, we find more pronounced negative abnormal returns for the firms featured in the more popular movies. Moreover, the event firms experience increased implied costs of capital following the movie releases.
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