A Friendly Turn: Advertising Bias in the News Media

60 Pages Posted: 6 Mar 2016

See all articles by Florens Focke

Florens Focke

University of Mannheim - Department of International Finance

Alexandra Niessen-Ruenzi

University of Mannheim - Department of Finance

Stefan Ruenzi

University of Mannheim - Department of International Finance

Date Written: March 3, 2016

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

Suggested Citation

Focke, Florens and Niessen-Ruenzi, Alexandra and Ruenzi, Stefan, A Friendly Turn: Advertising Bias in the News Media (March 3, 2016). Available at SSRN: https://ssrn.com/abstract=2741613 or http://dx.doi.org/10.2139/ssrn.2741613

Florens Focke

University of Mannheim - Department of International Finance ( email )

L9, 1-2
Mannheim, 68131
Germany

Alexandra Niessen-Ruenzi (Contact Author)

University of Mannheim - Department of Finance ( email )

Mannheim, 68131
Germany

Stefan Ruenzi

University of Mannheim - Department of International Finance ( email )

L9, 1-2
Mannheim, 68131
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
163
Abstract Views
894
rank
182,155
PlumX Metrics