Common Business Group Affiliation, Media Reporting, and Firms’ Information Environment

60 Pages Posted: 23 Jul 2020 Last revised: 5 Oct 2021

See all articles by Yi Ru

Yi Ru

Renmin University of China - Business School

Fei Xie

University of Delaware - Lerner College of Business and Economics; European Corporate Governance Institute (ECGI)

Jian Xue

Tsinghua University - School of Economics & Management

Date Written: September 20, 2021

Abstract

We examine whether connections through common business group affiliation affect media reporting on firms and whether firms experience any real effects consequently. 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, which affects firms’ information environment, costs of capital, and intensity of related party transactions.

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

JEL Classification: G32, G34, L82, M41

Suggested Citation

Ru, Yi and Xie, Fei and Xue, Jian, Common Business Group Affiliation, Media Reporting, and Firms’ Information Environment (September 20, 2021). 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

Yi Ru

Renmin University of China - Business School ( email )

Room 929
Mingde Business Building
Beijing, Beijing 100872
China

Fei Xie (Contact Author)

University of Delaware - Lerner College of Business and Economics ( email )

42 Amstel Ave
Newark, DE 19716
United States
(302) 8313811 (Phone)

HOME PAGE: http://sites.google.com/site/feisresearch/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Jian Xue

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

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