Abstract
This paper studies the effects of a firm’s political connections on media bias using a large sample of corporate news articles on publicly listed non-state-owned enterprises (non-SOEs) in China. We document that politically connected non-SOEs receive more favorable news coverage than politically unconnected non-SOEs. The media tone becomes less favorable after a negative exogenous shock to non-SOEs’ political connections. Furthermore, we find that this political connection induced media bias strongly relates to firm value. Finally, we show that the media tone of politically connected and unconnected non-SOEs deviate significantly around the time of political and corporate events.
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