Social Media and Corruption

58 Pages Posted: 9 May 2016

See all articles by Ruben Enikolopov

Ruben Enikolopov

Institute of Political Economy and Governance; New Economic School; ICREA; Universitat Pompeu Fabra; Barcelona GSE

Maria Petrova

Institute for Political Economy and Governance, Barcelona; Catalan Institution of Research and Advanced Studies (ICREA); Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE); New Economic School (NES)

Konstantin Sonin

University of Chicago - Harris School of Public Policy; Higher School of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2016

Abstract

There is ample evidence that in democratic countries traditional mass media affect peopleâ?™s behavior and foster political and corporate accountability. Do new media such as blogs play a similar role in non-democratic countries, where offline media are often suppressed? We study consequences of blog posts about corruption in Russian state-controlled companies. We show that anti-corruption blog posts by Aleksei Navalny, a popular Russian civic activist, had a negative causal impact on market returns of state-controlled companies. For identification, we exploit the analysis of 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 and even positive 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.

Keywords: financial markets, governance, political economy, social media

JEL Classification: L82, L86, P16

Suggested Citation

Enikolopov, Ruben and Petrova, Maria and Sonin, Konstantin, Social Media and Corruption (May 2016). CEPR Discussion Paper No. DP11263, Available at SSRN: https://ssrn.com/abstract=2777570

Ruben Enikolopov (Contact Author)

Institute of Political Economy and Governance ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

New Economic School ( email )

Skolkovskoe shosse 45
Moscow, Skolkovo 143026
Russia

ICREA ( email )

Passeig Lluís Companys, 23
Barcelona, 08010
Spain

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

Barcelona GSE ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Maria Petrova

Institute for Political Economy and Governance, Barcelona ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Catalan Institution of Research and Advanced Studies (ICREA) ( email )

Passeig Lluís Companys, 23
Barcelona, 08010
Spain

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

New Economic School (NES) ( email )

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Konstantin Sonin

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Higher School of Economics ( email )

20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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