Getting A CEO In The Media May Be As Simple As A Press Release Mention

The visibility of a company’s chief executive is the media may be determined by a press release mention – at least in part.

Recent research delves into what determines CEO media coverage and examines whether it is naturally bestowed because of operating performance or can instead be influenced by firms. The findings: CEO promotion is associated with a more than three-fold increase in the likelihood of media coverage of a CEO.

In a paper titled CEO Visibility: Are Media Stars Born or Made?, Stanford University investigators Elizabeth Blankespoor and Ed deHaan outline the entirety of their findings.

Prior research has already associated CEO media visibility with job acquisition and pay premiums, and boards of directors are proven to consider CEO media visibility in compensation decisions. Previous studies have also found that media coverage affects firms’ information environments and market pricing, and survey evidence suggests a CEO’s individual reputation determines about 50% of an entity’s overall reputation.

Influencing CEO media coverage through strategic disclosure

This most recent research suggests that firms and CEOs can influence the amount of CEO media coverage received through strategic disclosure. Utilizing CEO names and quotes in press releases has a notable impact on subsequent mentions in the media.

The study contemplated 572,394 press releases issued by S&P 1500 firms from 2003 to 2013, of which 32.6% named the CEO and 24.4% included a quote from the CEO. It analyzed external media coverage based on articles about the firms written by Thomson Reuters news affiliates within two-day windows of the press releases.

Researchers found CEO promotion to be more common in economically important news and in releases conveying good news rather than bad. Moreover, the earlier it is in the CEO’s tenure, the more prevalent promotion is. “The results are consistent with CEOs and/or firms exercising discretion over CEO promotion, based on the underlying costs and benefits thereof,” investigators wrote.

CEO promotion

So how far does CEO promotion go in getting press attention?

Mentioning the CEO by name in a firm-initiated press release leads to a 125% relative increase in the probability of him or her being named by a reporter. The inclusion of a quote in the release leads to a 222% increase in the likelihood of the reporter quoting the CEO, and including what investigators defined as a “clear” and “vivid” quote implies a 320% relative increase in the probability of media quoting by the CEO.

Of the media articles with a CEO quote, 42% included press-released-sourced quotes. And the more vivid and clear the quote, the greater the likelihood it will be included. Researchers defined clear as the characteristic of being coherent and understandable and vivid as emotionally interesting, concrete and imagery provoking, and proximate in a sensory, temporal and special way.

Investigators found that the earliest versions of media articles were equally likely to contain press-release-sourced quotes as they are non-press-release-sourced quotes. But in subsequent revisions of the same article, quotes sourced from company releases decreased, while those coming from other sources increased.

It is also worth noting that not all promotion is good promotion, including when it comes to chief executives. The study found that abnormally high promotion is associated with declining accounting performance for up to three years in the future as well as some evidence of a similar association with future stock returns.

“Collectively, these results indicate that abnormally high levels of CEO promotion are evidence of CEOs courting the press at the shareholders’ expense,” investigators wrote.

Companies and CEOs can, in fact, influence media visibility, although it is possible to overdo it. “In sum, we find that CEO visibility is not entirely born from operating performance, but is rather, at least partly, made by managing the press,” they concluded.

See full PDF below.