A Friendly Turn: Advertising Bias in the News Media

Abstract

This paper investigates whether newspapers report more favorably about advertising corporate clients than about other firms. Our identification strategy based on high-dimensional fixed effects and high frequency advertising data shows that advertising leads to more positive press coverage. This advertising bias in reporting is found to be mitigated but not eliminated by newspapers' reputational concerns. Advertising bias manifests particularly in less negative reporting of a newspaper about bad news events of its advertising clients as compared to firms not advertising in this newspaper. Our findings cast doubt on the independence of the press from corporate pressure.

Keywords: Media, Advertising Bias, Newspapers, Commercial Bias, Computer Linguistics

JEL Classification: M37, M38