Common Business Group Affiliation, Media Reporting, and Firm Real Effects

Common Business Group Affiliation, Media Reporting, and Firm Real Effects

Yi Ru, Fei Xie, Jian Xue

Series number :

Serial Number: 
691/2020

Date posted :

July 28 2020

Last revised :

October 05 2021
SSRN Share

Keywords

  • Common Business Group Affiliation • 
  • Media Ownership • 
  • Media Objectivity • 
  • Real Effects

We examine whether common business group affiliation affects media reporting on firms and whether firms experience any real effects as a result. We find that firms receive more positive coverage from connected newspapers.

This result is robust to a DiD design and controlling for newspaper-firm pair fixed effects, and is stronger when business groups have more incentive and power to influence the newspapers and when firms need more positive media coverage. We further show that these firm-media connections undermine the newspaper’s information intermediary role, thereby obfuscating firms’ information environment and facilitating opportunistic related party transactions by business groups.

Authors

Real name:
Yi Ru
Real name:
Research Member
University of Delaware, Lerner College of Business and Economics
Real name:
Jian Xue