Media Attention and Regulatory Efficiency of Corporate Violations: Evidence from China
64 Pages Posted: 20 Jan 2020 Last revised: 20 Apr 2021
Date Written: November 16, 2020
We examine the influence of media attention on regulatory efficiency of corporate violations in restrictive media environment. Using a hand-collected sample of corporate violations in China during 1998-2018, we find that fraudulent firms accompanied by more negative media attention are associated with a higher hazard rate of the violation being investigated and enforced. The effect is not diminished by the political connections of the fraudulent firms and is robust to accounting for potential confounding factors. We interpret our findings to suggest that by playing both an informational intermediary role and a pressure-exerting role in influencing regulatory efficiency, the media can serve as an effective governance mechanism even in markets with strict media control.
Keywords: Media Attention, Regulatory Efficiency, and Corporate Violations
JEL Classification: G31, G32, G34
Suggested Citation: Suggested Citation