Common Business Group Affiliation, Media Reporting, and Firm Real Effects

We examine whether common business group affiliation affects media reporting on firms and whether firms experience any real effects as a result. We find that firms receive more positive coverage from connected newspapers. This result is robust to a DiD design and controlling for newspaper-firm pair fixed effects, and is stronger when business groups have more incentive and power to influence the newspapers and when firms need more positive media coverage. We further show that these firm-media connections undermine the newspaper’s information intermediary role, thereby obfuscating firms’ information environment and facilitating opportunistic related party transactions by business groups.

Keywords: Common Business Group Affiliation, Media Ownership, Media Objectivity, Real Effects

JEL Classification: G32, G34, L82, M41

Suggested Citation: Suggested Citation

Ru, Yi and Xie, Fei and Xue, Jian, Common Business Group Affiliation, Media Reporting, and Firm Real Effects (April 12, 2022). European Corporate Governance Institute – Finance Working Paper No. 691/2020, Available at SSRN: https://ssrn.com/abstract=3655874 or http://dx.doi.org/10.2139/ssrn.3655874