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Protecting the Giant Pandas: Newspaper Censorship of Negative News

57 Pages Posted: 13 Jan 2017 Last revised: 2 Oct 2017

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Yi Li

Hunan University

Qiliang Liu

Wuhan University - School of Economics and Management

Han Wu

HEC Paris

Date Written: October 2, 2017

Abstract

We investigate newspaper censorship of firm-level negative news using a rare setting in which many companies were involved in similar tunneling scandals. We find that the Chinese censorship authorities restrict the dissemination of tunneling news on state-owned enterprises, firms with greater numbers of employees, and large taxpayers. An examination of different levels of censors reveals a surprising magnitude of local protectionism: almost all tunneling news involving in-province firms is blocked by provincial governments. We also find that cross-provincial competition and the political power structures are factors driving the provincial-level censorship. Finally, we show that the tunneling news that is reported leads to negative market reactions and greater trading volumes, indicating that the news that survives the censorship has information content.

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

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

Suggested Citation

Hope, Ole-Kristian and Li, Yi and Liu, Qiliang and Wu, Han, Protecting the Giant Pandas: Newspaper Censorship of Negative News (October 2, 2017). 2017 Canadian Academic Accounting Association (CAAA) Annual Conference. Available at SSRN: https://ssrn.com/abstract=2897758 or http://dx.doi.org/10.2139/ssrn.2897758

Ole-Kristian Hope (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

Yi Li

Hunan University ( email )

2 Lushan South Rd
Changsha, Hunan 410082
United States

Qiliang Liu

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Han Wu

HEC Paris ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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