Broadcast Media and Asset Prices: The Effect of an Anti-Corruption Message in China

51 Pages Posted: 24 Jul 2020

See all articles by Martin J. Conyon

Martin J. Conyon

Bentley University; Wharton School, Center for Human Resources

Xi Fu

University of Liverpool

Meng He

Sun Yat-Sen University (SYSU)

Zhifang Zhang

Warwick Business School

Date Written: April 1, 2019

Abstract

Does entertainment broadcast media affect equity stock prices? We exploit an exogenous event to identify such media effects, namely, the broadcasting in China of the highly popular TV drama ‘In the Name of People’ on March 28th, 2017. The TV show contained a robust State-approved anti-corruption message and is expected to alter investor perceptions. We find that stock prices fall in reaction to the broadcast. Importantly, the negative effect on asset prices is higher in magnitude for firms with political connections. Also, privately-owned politically connected firms exhibit more substantial adverse price effects compared to state-owned firms. The reduction in investors’ valuation of politically connected firms persists over the long run. Our empirical findings support the notion that traditional mass-media (i.e., TV) modifies the information set of investors and has significant educational value. In our case, an anti-corruption TV drama raises investors’ awareness of the potentially high costs of a firm’s political connections when the State is actively pursuing an anti-corruption strategy.

Keywords: Broadcast Media, Anti-corruption, China, Political Connections, Event study

JEL Classification: G3, G14, G18, P2

Suggested Citation

Conyon, Martin J. and Fu, Xi and He, Meng and Zhang, Zhifang, Broadcast Media and Asset Prices: The Effect of an Anti-Corruption Message in China (April 1, 2019). Available at SSRN: https://ssrn.com/abstract=3640213 or http://dx.doi.org/10.2139/ssrn.3640213

Martin J. Conyon

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Wharton School, Center for Human Resources ( email )

3600 Locust Walk
Philadelphia, PA 19104-6365
United States

Xi Fu

University of Liverpool ( email )

Chatham Street
Liverpool, L69 7ZA
United Kingdom

Meng He

Sun Yat-Sen University (SYSU) ( email )

135, Xingang Xi Road
Guangzhou, Guangdong 510275
China

Zhifang Zhang (Contact Author)

Warwick Business School ( email )

Warwick Business School
Coventry CV4 7AL
United Kingdom

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