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The Impact of Corporate Governance Press News on Stock Market Returns


  • The authors wish to thank two anonymous referees, John Doukas, Marcus Schmidt, Stefano Caselli, the participants at the 2009 Annual Meeting of the European Financial Management Association (EFMA) and the participants at the 2008 Annual Meeting of the Italian Academy of Management (AIDEA) for their very helpful comments. All errors, of course, rest with the authors. Correspondence: Franco Fiordelisi.


Stock market prices reflect information regarding firms’ business environments, operations and, in general, their fundamentals. Recently, various studies have analysed the link between news coverage and stock prices but no evidence exists on how channels and ways of communication of information affect investors’ behaviour. We analyses these aspects focussing on a large sample of corporate governance news published between 2003 and 2007 in ‘Il Sole 24 Ore’, Italy's major financial newspaper. We show that before news is made public investors are only able to assess the type of corporate governance event underlying it. After publication, investors are influenced by the content (positive or negative) and the tone of communication (strong or weak) of the news.