Protecting the Giant Pandas: Newspaper Censorship of Negative News
57 Pages Posted: 13 Jan 2017 Last revised: 2 Oct 2017
Date Written: October 2, 2017
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
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