Public relations expenditure, media tone, and regulatory decisions

Wu, Yanling; Tian, Gary Gang

doi:10.1016/j.jcorpfin.2020.101793

Cited by 14 publications

(6 citation statements)

References 83 publications

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“…Previous studies confirm that firms can obtain more favorable media reports by increasing advertising spending (Reuter & Zitzewitz, 2006; Rinallo & Basuroy, 2009; Gurun & Butler, 2012), hiring investor relation firms (Solomon, 2012), and publicizing corporate social responsibility (CSR) activities (Cahan et al., 2015). This strategic media management is more prominent during the firms’ critical events, such as IPOs, M&As, and instances of wrongdoing (Ahern & Sosyura, 2014; Bajo & Raimondo, 2017; Bhattacharya et al., 2009; Wu & Tian, 2021; Zavyalova et al., 2012). Following the same argument, we predict that PC s may help firms to manage their media reputation.…”

Section: Institutional Background and Hypotheses Developmentmentioning

confidence: 99%

“…Will the media play an effective role of an information intermediary after corporate fraud is officially exposed? Some recent studies find that firms can proactively manage their media reports to enhance branding and boost stock prices (Cahan et al., 2015; Gurun & Butler, 2012; Reuter & Zitzewitz, 2006; Solomon, 2012), especially during the firms’ critical events, such as IPOs, M&As, and instances of wrongdoing (Ahern & Sosyura, 2014; Bajo & Raimondo, 2017; Bhattacharya et al., 2009; Wu & Tian, 2021; Zavyalova et al., 2012). If this is the case, will there also be media bias after fraud is officially exposed?…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Corporate fraud, political connections, and media bias: Evidence from China

Wang,

Li,

Lai

et al. 2023

Bulletin of Econ Res

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This article empirically examines how political connections (PCs) affect a firm's media reaction after corporate fraud. Using data for Chinese listed companies from 2008 to 2021, we find that the media reports more positively for firms with PCs than for others that do not possess such advantages after the enforcement against fraud. The results are robust to a series of robustness checks and endogeneity corrections. When decomposing media reports, we find that PCs only facilitate positive media coverage but do not impede negative media coverage, which is more pronounced in state‐controlled media. This suggests that PCs protect firms’ branding by facilitating positive media reports rather than withholding bad news. Moreover, we find this protective effect is more pronounced in firms with stronger PCs, weaker anti‐corruption regulation, lighter punishment for fraud, private ownership, and more donations. Further, the consequences analysis shows that this kind of protective effect significantly increases the probability of future fraud and stock price crashes. Our findings present a new perspective on the role of PCs and provide evidence for political bias in media coverage.

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Section: Institutional Background and Hypotheses Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Corporate fraud, political connections, and media bias: Evidence from China

Wang,

Li,

Lai

et al. 2023

Bulletin of Econ Res

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“…Specifically, Li, Shi and Zhou found that negative news prior to the review committee approval meeting reduced the probability of a successful IPO outcome [18]. Even in biased media markets [20], media can influence regulators' decisions and improve the efficiency of government decisionmaking, which is particularly important in a centralized economy like China.…”

Section: Evidencementioning

confidence: 99%

Media Coverage Influence on Initial Public Offerings (IPO)

Cao¹,

Hu²,

Liu³

et al. 2022

Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)

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This paper introduces the IPO (Initial Public Offering) for the enterprises which want to go public, and discusses the role of media in this process. Prior research found the correlation between media reports and IPO underpricing by the uncertainty of events reported by the media. And researchers found that the media time and media reputation in financial news reports also have the potential impact on IPO. This paper summarizes the influence of media in IPO from these three aspects, conclude that positive media tones provides greater investment possibilities and they also found that before and after the IPO stage, the closer the news is to the IPO date will bring greater public impact and on the IPO date, the time does not matter. About the media reputation, a good media reputation can promote the share price of an IPO. However, in the unpredictable media environment, researchers still need more exploration to help managers make correct decisions under the trend of increasing IPO activities.

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“…Hence, the yield spreads of corporate bonds issued by companies located in more corrupt provinces tend to be lower. Following Wu and Tian (2021), we proxy for corruption by considering the aggregate number of officials in a province that were arrested under President Xi Jinping's anti-corruption campaign (between 2013 and 2017), scaled by the province's average GDP over that period. A higher number of scaled arrests implies a higher degree of corruption.…”

Section: Control Variablesmentioning

confidence: 99%