Media Coverage of Start-ups and Venture Capital Investments
认领作者 认领管理权限
发布日期:2022年10月01日 上次修订日期:2023年06月01日


Using a large sample of over 5,000 start-ups across various industries and 524 media outlets in China between 2000 and 2016, we examine the effects of media coverage of start-ups on VC investment decisions and performance. To the best of our knowledge, for the first time in the finance literature, we have discovered that media coverage of start-ups significantly affects VC investment decisions and exit performance. Specifically, such coverage, especially positive coverage, significantly increases the probability and amount of VC investments in start-ups. It also significantly improves the exit performance of VC investments. The significant effects of media coverage of start-ups on VC investments are driven by market-oriented instead of state-controlled media. We further find that VC investments in a focal start-up are significantly influenced by the average media coverage of other start-ups in the same industry or the same city. Our results are robust to a battery of robustness tests. Our research contributes to the behavioral finance literature by showing that an increasingly prominent type of institutional investors, venture capitalists, just like individual investors, are also subject to limited attention. Our research also extends the research by You, Zhang and Zhang (2018) by revealing the heterogeneous effects of market-oriented and state-controlled media on VC investments. Last but not the least, we are the first to discover that peer start-ups’ media coverage matters for VC investments in the focal firms, thereby pushing the frontier of research on the roles of media in finance.

周翔翼 ; Fang Zheng ; Sheng Xiao ; Media Coverage of Start-ups and Venture Capital Investments (2022年10月01日)

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