What do ads buy? Daily coverage of listed companies on the Italian press

- We correlate newspaper coverage of Italian companies with advertising expenditure.
- We control for company and newspaper fixed effects, and ownership links.
- Coverage is positively related with company ads expenditure on each newspaper.
- A 75,000-euro increase in company ads is associated with 8 more articles about it.
- Coverage is higher after a press release, but especially in newspapers with more ads.

We match daily data on newspaper coverage of a sample of Italian listed companies with monthly data on the amount of advertising that a given company has purchased on a given newspaper. Controlling for time-invariant features of each newspaper and of each company - and for ownership links between companies and newspapers - we show that newspaper coverage of a company is positively and significantly related with advertising expenditure by that company on that newspaper. The magnitude of this correlation is quite large: when controlling for ownership links, a standard deviation increase in monthly ads expenditure (i.e. 75,000 euros) is on average associated with 8 additional articles per month mentioning that company. We also find that coverage of a company is higher the day after a press release, but especially in newspapers where more ads are purchased. This result on press releases is robust to controlling for time invariant features of each company-newspaper pair, i.e. for (company × newspaper) fixed effects.Moreover, coverage is correlated with past day absolute return and trading volume, and this relationship appears to be steeper for those newspapers where more ads are purchased, especially in the case of positive returns.