Media Slants and Entrepreneurship

Abstract

The ways in which media news is slanted can shape beliefs about the economy, thereby affecting the decision to start a new business. Using exogenous variation in the introduction of Fox News Channel across US counties, I find that increased exposure to a pro-Republican slant during a Republican administration is positively associated with new firm creation. This effect is more pronounced among less-educated entrepreneurs, who rely relatively more on the media to form their economic expectations. I further find that the newly created firms are of lower quality, as evidenced by lower survival rates, more job losses, and higher small business loan default rates.