Media Attention and Innovation

Abstract

Research exploring how extra-legal institutional aspects might impact corporate investment policy in innovation is currently still in its early stages. This lack of research is even greater when it comes to studying the role of media attention in corporate innovation. Thus, this study extends prior literature by investigating the relationship between media visibility and corporate innovation. We examine a sample of Spanish firms over a wide period: 2004-2019. The results obtained indicate that media attention has a positive effect on the level of corporate innovation. This finding is robust to alternative measures of media visibility and innovation, and different econometric specifications. The result to emerge is consistent with the arguments that state that the media curb the opportunistic practices of directors and dominant owners, reduce information asymmetry, and thereby foster the use of external funding, as well as increase the pressure on firms to meet stakeholders’ demands for innovation.