Media Coverage and the Cost of Debt
Haoyu Gao, Junbo Wang, Yanchu Wang, Chunchi Wu and Xi Dong

Journal of Financial and Quantitative Analysis.

Abstract
This paper investigates the relation between media coverage and offering yield spreads using a
comprehensive dataset of 5,338 industrial bonds issued from 1990 to 2011. We find that media
coverage is negatively associated with firms’ cost of debt, and this association is robust to
controlling for standard yield determinants, different model specifications, and endogeneity. We
identify four economic channels through which media coverage influences the cost of debt:
information asymmetry, governance, liquidity, and default risk. Importantly, media coverage has
an independent influence beyond the effects of these economic mechanisms and is not a proxy
for other firm attributes.