The Corporate Governance Role of the Media: Evidence from Russia

75 Pages Posted: 25 Sep 2006 Last revised: 23 Sep 2010

See all articles by I. J. Alexander Dyck

I. J. Alexander Dyck

University of Toronto - Rotman School of Management

Natalya Volchkova

New Economic School (NES); Center for Economic and Financial Research (CEFIR)

Luigi Zingales

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2006

Abstract

We study the effect of media coverage on corporate governance by focusing on Russia in the period 1999-2002. This setting offers us three ideal conditions for such a study: plenty of corporate governance violations, no alternative mechanisms to address them, and the presence of an investment fund (the Hermitage) that actively lobbies the international press to shame companies perpetrating those violations. We find that Hermitageâ€TMs lobbying is effective in increasing the coverage of corporate governance violations in the Anglo-American press. We also find that coverage in the Anglo-American press increases the probability that a corporate governance violation is reversed. This effect is present even when we instrument coverage with an exogenous determinant, i.e. the Hermitageâ€TMs portfolio composition at the beginning of the period. The Hermitageâ€TMs strategy seems to work in part by impacting Russian companiesâ€TM reputation abroad and in part by forcing regulators into action.

Suggested Citation

Dyck, I.J. Alexander and Volchkova, Natalya and Zingales, Luigi, The Corporate Governance Role of the Media: Evidence from Russia (September 2006). NBER Working Paper No. w12525. Available at SSRN: https://ssrn.com/abstract=931610

I.J. Alexander Dyck

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S 3E6
Canada
416-946-0819 (Phone)

Natalya Volchkova

New Economic School (NES)

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Center for Economic and Financial Research (CEFIR) ( email )

47 Nakhimovsky Prospect, Office #720
117418 Moscow
Russia
+7-095-332 4083 (Phone)

Luigi Zingales (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
60
Abstract Views
1,245
rank
33,098
PlumX Metrics