Political Connections, Media Coverage, and Corporate Violations

37 Pages Posted: 20 Jan 2020

See all articles by Zhiqian Jiang

Zhiqian Jiang

Florida State University, College of Business, Department of Finance

Baixiao Liu

Florida State University

Jinsong Liu

Tsinghua University

Qianwei Ying

Sichuan University

Date Written: November 28, 2019

Abstract

We investigate how political connections of public firms in China influence the media coverage of corporate violations. We find that corporate violations committed by politically-connected firms receive less negative media coverage than violations committed by non-politically-connected firms. The effect is more pronounced for firms receiving more attention from the market-oriented media. We employ the scandal involving the largest Chinese market-oriented business newspaper as an exogenous shock to establish a causal link. We further find that less negative media coverage of corporate violations is associated with longer duration of the violation being investigated and being enforced. We interpret our findings to suggest that corporate political connections suppress negative media coverage of corporate misconduct, and the suppression serves as a channel through which firms keep receiving benefits from their political ties.

Keywords: Political Connections, Media Coverage, and Corporate Violations

JEL Classification: G31, G32, G34

Suggested Citation

Jiang, Zhiqian and Liu, Baixiao and Liu, Jinsong and Ying, Qianwei, Political Connections, Media Coverage, and Corporate Violations (November 28, 2019). Available at SSRN: https://ssrn.com/abstract=3494688 or http://dx.doi.org/10.2139/ssrn.3494688

Zhiqian Jiang

Florida State University, College of Business, Department of Finance ( email )

Tallahassee, FL
United States

Baixiao Liu (Contact Author)

Florida State University ( email )

Tallahasse, FL 32306
United States

Jinsong Liu

Tsinghua University ( email )

Beijing
China

Qianwei Ying

Sichuan University ( email )

No. 24 South Section1, Yihuan Road,
Chengdu, Sichuan 610064
China

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
31
Abstract Views
263
PlumX Metrics