Media Coverage of Environmental Pollution and the Investment of Polluting Companies

Abstract

This study examines the effect of local media coverage of environmental pollution on corporate investment based on a textual analysis of China’s provincial newspapers. Using a sample of publicly listed firms in polluting industries, we document a significantly positive effect of media coverage on both the total investment and green investment of these firms. Further analyses reveal that the positive effect of pollution-related media coverage on investment is more pronounced when firms have weak governance mechanisms. Overall, our findings imply that media not only plays an important monitoring role but also enhances corporate social responsibility.

Keywords: Media coverage, Investment, Environmental pollution, Corporate governance, Textual analysis

JEL Classification: G31, G38, M14