Social Media and Corruption
Institute of Political Economy and Governance; ICREA; Universitat Pompeu Fabra; New Economic School; Barcelona GSE
Institute for Political Economy and Governance, Barcelona; Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE); New Economic School (NES)
University of Chicago - Irving B. Harris Graduate School of Public Policy Studies; Higher School of Economics; Centre for Economic Policy Research (CEPR)
February 22, 2016
Do new media promote accountability in non-democratic countries, where offline media are often suppressed? We show that anti-corruption blog posts exposing corruption in Russian state-controlled companies, had a negative causal impact on their market returns. For identification, we exploit the precise timing of blog posts combined with quasi-random variation in access to blog platform caused by hacker attacks. The effect becomes less pronounced for the posts that attract the most attention, consistent with disciplining effect of social media. Furthermore, the posts have a long-term impact on returns and are associated with higher management turnover and less minority shareholder conflicts. Taken together, our results suggest that social media can discipline corruption even in a country with limited political competition and heavily censored mass media.
Number of Pages in PDF File: 55
Keywords: political economy, financial markets, social media, governance
Date posted: September 27, 2012 ; Last revised: April 4, 2016
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