The Value of Visibility

We analyze the relation between firm visibility and stock returns, using a novel dataset on New York Times coverage of U.S. firms from 1924 to 2013. We find that firms with persistently higher levels of media coverage exhibit predictably higher returns. Top-quintile outperform bottom-quintile coverage stocks by 2.64% per year (Sharpe Ratio of 0.47, Momentum: 0.47). Higher media coverage predicts significant improvements in corporate governance, as well as higher sales growth and profitability growth. Thus, the evidence is consistent with visibility creating value through monitoring and advertising, while stock markets inadequately price the positive effects of firm visibility.