zwitserlanden
The value of visibility

The value of visibility

04-07-2018 | From the field

This paper analyzes the relation between firm visibility and stock returns. For this, it uses a novel dataset on New York Times coverage of U.S. firms from 1924 to 2013.

  • David Blitz
    David
    Blitz
    Head of Quant Research

The authors find that firms with persistently higher levels of media coverage exhibit predictably higher returns, with top-quintile coverage stocks outperforming bottom-quintile coverage stocks by 2.64% per year. Higher media coverage is also found to predict significant improvements in corporate governance, as well as higher sales growth and profitability growth.

The authors argue that their results are consistent with visibility creating value through monitoring and advertising, and stock markets inadequately pricing the positive effects of firm visibility. What we like about this paper1 is that it uses an original data source for predicting stock returns, over a long sample period covering multiple economic cycles.

The findings are intriguing and seem plausible, but appear to be inconsistent with previous studies which have established that attention-grabbing stocks tend to underperform, such as stocks which high share turnover. 

1A. Hillert and M. Ungeheuer, “The Value of Visibility”, SSRN working paper, no. 2689652, 2017.

Stay informed on Quant investing with monthly mail updates
Stay informed on Quant investing with monthly mail updates
Subscribe
From the field
From the field

Our researchers publish many whitepapers based on their own empirical studies; they also follow quantitative research done by others.

Read all articles
Subjects related to this article are:

Important legal information

The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.

The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.

Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is Robeco Switzerland AG, Josefstrasse 218, 8005 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/Robeco Switzerland AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/Robeco Switzerland AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.

This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.

I Disagree