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Can old sin make new shame? Stock market reactions to the release of movies re-exposing past corporate scandals

Author

Listed:
  • Kang, Le
  • Jiang, Han
  • Nie, Ziye Zoe
  • Zhou, Hui

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.

Suggested Citation

  • Kang, Le & Jiang, Han & Nie, Ziye Zoe & Zhou, Hui, 2024. "Can old sin make new shame? Stock market reactions to the release of movies re-exposing past corporate scandals," Finance Research Letters, Elsevier, vol. 67(PA).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pa:s1544612324007852
    DOI: 10.1016/j.frl.2024.105755
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    More about this item

    Keywords

    Event study; Corporate scandals; Media; Cost of capital;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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