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| Does Media Coverage Signal Startups’ Future? |
| LUO Wei, HE Ding, HONG Lisha, CHANG Guozhen
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Guanghua School of Management,Peking University;
ABB China |
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Abstract We examine whether financial media coverage of startups has information content. Using a sample of startups raising Series A funding from 1994 to 2014, we find evidence that both the media exposure and the media tone can forecast future performance of a startup. Specifically, the weekly number of media reports and the positive tone in the reports are positively associated with the amount of venture capital funding raised by the startup in the next round and the probability of the startup to go public or be acquired in the future. In addition, we find the signal effect of media coverage is weaker when the venture capitalists’ reputation is higher.
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Received: 03 June 2016
Published: 18 January 2018
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