Newspaper Censorship in China: Evidence from Tunneling Scandals

Media dissemination has an important function in facilitating price discovery. Political pressure that restricts media dissemination can hinder this function and affect investors’ perceptions. We investigate the magnitude and economic consequences of China’s newspaper censorship, which blocks further dissemination of firm-disclosed information, using a setting of “tunneling” scandals. We show significant evidence of censorship of tunneling-related negative news at both the national and the local levels. We further find that censorship leads to delays in the dissemination of tunneling news and that the news that survives censorship potentially targets less serious issues, which hinders the media’s dissemination function and delays incorporation of information into prices.

Keywords: Censorship, Media, Newspapers, China, Social and Economic Incentives, Local Protection, Information Environment, Market Reactions

JEL Classification: D83, F23, G30, G34, J50, M10, M16, M41, M48, N25, N45, O53

Suggested Citation: Suggested Citation

Hope, Ole-Kristian and Li, Yi and Liu, Qiliang and Wu, Han, Newspaper Censorship in China: Evidence from Tunneling Scandals (May 3, 2020). 2017 Canadian Academic Accounting Association (CAAA) Annual Conference, 28th Annual Conference on Financial Economics and Accounting, Available at SSRN: https://ssrn.com/abstract=2897758 or http://dx.doi.org/10.2139/ssrn.2897758