The Power Behind the Pen: Institutional Investors’ Influence on Media during Corporate Litigation

73 Pages Posted: 21 May 2020 Last revised: 11 Dec 2023

See all articles by Jie He

Jie He

University of Georgia - Department of Finance

Han Xia

University of Texas at Dallas - Naveen Jindal School of Management

Yabo Zhao

The Chinese University of Hong Kong, Shenzhen

Luo Zuo

National University of Singapore; Cornell University

Date Written: December 11, 2023

Abstract

Institutional investors increasingly hold substantial equity stakes in both media companies and industrial firms. When industrial firms become defendants in corporate litigation, media companies that are simultaneously held by these institutional investors provide more lenient coverage of the defendants. This effect becomes more pronounced when institutions have greater incentives and ability to exert influence over the media companies. Influenced media outlets also reduce their coverage of the defendants, especially that related to legal matters. After the lenient coverage, institutional investors gradually reduce their stakes in defendant firms and increasingly vote in favor of the management of these media companies. Our findings suggest that media outlets tend to slant their coverage of corporate litigation to cater to the preferences of large shareholders.

Keywords: Institutional investors, media incentives, media tone, corporate litigation

JEL Classification: G14, G23, G32, L82, M41

Suggested Citation

He, Jie and Xia, Han and Zhao, Yabo and Zuo, Luo, The Power Behind the Pen: Institutional Investors’ Influence on Media during Corporate Litigation (December 11, 2023). Available at SSRN: https://ssrn.com/abstract=3584740 or http://dx.doi.org/10.2139/ssrn.3584740

Jie He

University of Georgia - Department of Finance ( email )

B318 Amos Hall
Terry College of Business, University of Georgia
Athens, GA 30602-6253
United States

Han Xia (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Yabo Zhao

The Chinese University of Hong Kong, Shenzhen ( email )

Luo Zuo

National University of Singapore ( email )

Cornell University ( email )

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