Newspaper Censorship in China: Evidence from Tunneling Scandals

63 Pages Posted: 18 Sep 2020 Last revised: 22 Oct 2020

See all articles by Ole-Kristian Hope

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

Multiple version iconThere are 2 versions of this paper

Date Written: June 17, 2020

Abstract

Media dissemination plays an important role in facilitating price discovery. Political pressure that restricts media dissemination can hinder this function and affect investors’ perceptions. This paper studies the magnitude of newspaper censorship in China and its economic consequences using a setting of “tunneling” scandals. We find significant evidence of censorship of tunneling-related negative news at the national and local level. We further show that news that survives censorship reduces information asymmetry and improves pricing efficiency. We find that censorship blocks informative tunneling news and delays incorporation of tunneling reporting into prices.

Keywords: Censorship, Media Dissemination, Newspapers, China, Local Protection, Information Environment, Tunneling, Financial Disclosure

JEL Classification: G15, G18, G30, G32, M10, M40, M41, M48

Suggested Citation

Hope, Ole-Kristian and Li, Yi and Liu, Qiliang and Wu, Han, Newspaper Censorship in China: Evidence from Tunneling Scandals (June 17, 2020). Forthcoming, Management Science, HEC Paris Research Paper No. ACC-2020-1389, Rotman School of Management Working Paper No. 362934, Available at SSRN: https://ssrn.com/abstract=3629341

Ole-Kristian Hope

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, CA Hunan 410082
China

Qiliang Liu

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Han Wu (Contact Author)

HEC Paris ( email )

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

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