Out of Bound, Out of Control: Corporate Wrongdoing and the Process of Media Disapproval

Abstract

This paper introduces a process model that identifies limitations in media’s corporate governance role to explain why and how not all corporate wrongdoing is subjected to media disapproval. Media disapproval involves three stages: detection, interpretation, and response. Corporate wrongdoing that falls within media’s perceptual field can be selected for reporting. Past social performance that signals an altruistic orientation accumulates moral capital that can temper media interpretation of observed corporate wrongdoing. Media employ a cost–reward analysis to guide their response, state ownership increasing the opportunity cost of disapproval, which could damage favorable media relations with the government. Empirical results of analyses of a panel data sample of 3,202 Chinese publicly listed firms between 2012 and 2017 provides support for this process model of media disapproval of corporate wrongdoing.