Media Slant Against Foreign Owners: Downsizing

53 Pages Posted: 6 Oct 2012

See all articles by Guido Friebel

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Matthias Heinz

University of Cologne - Department of Personnel Economics; Centre for Economic Policy Research (CEPR)

Abstract

We establish the existence of strong media slant against foreign owners. Using a unique data set from nation-wide distributed quality newspapers in Germany, we find that a foreign firm that downsizes in Germany receives almost twice as much attention than a domestic firm. This quantitative slant is accompanied by qualitative slant; newspapers report in a more negative way about downsizing foreign than domestic firms. The slant is present in all quality newspapers, but it increases from right to left in the political spectrum. This is consistent with theory papers arguing that slant is an equilibrium phenomenon. The slant we document is a clean measure for economic xenophobia; however, not geared against migrants, but against foreign owners. The slant can be a substantial obstacle to FDI, as illustrated by case studies. Our results are likely to be a lower bound estimate, because Germans are rather globalization-friendly and we are looking at quality papers, not tabloids.

Keywords: media economics, globalization, economic xenophobia, multi-national enterprises, foreign direct investment

JEL Classification: L82, L33, L10

Suggested Citation

Friebel, Guido and Heinz, Matthias, Media Slant Against Foreign Owners: Downsizing. IZA Discussion Paper No. 6859, Available at SSRN: https://ssrn.com/abstract=2158001

Guido Friebel (Contact Author)

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Matthias Heinz

University of Cologne - Department of Personnel Economics ( email )

Cologne, 50923
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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