Signals in the news: How media reputation improves stock liquidity around the world

We investigate the effect of firm media reputation on stock liquidity and whether national cultures and social trust affect this relation. Using a data set of firms across 40 countries over the period between 2000 and 2020, we find that firm media reputation is positively related to stock liquidity. The positive relation between media reputation and stock liquidity is amplified among firms with less information transparency and lower firm visibility. Our cross-country results indicates that the liquidity effect of media reputation is more pronounced for firms in cultures with high levels of collectivism and uncertainty avoidance, and those with high social trust. Finally, our additional analysis suggests that the liquidity-enhancing effect of media reputation benefits firms by reducing the cost of raising capital.