 Political connections and media bias: Evidence from ChinaDenis Schweizer, Xinjie Wang, Ge Wu and Aoran Zhang Journal of Corporate Finance, 2025, vol. 94, issue C Abstract: This paper examines how political connections shape media bias and contribute to regulatory noncompliance in China's capital markets. Using a large sample of news articles on publicly listed non-state-owned enterprises (non-SOEs), we find that politically connected firms receive significantly more favorable media coverage than their unconnected peers. A difference-in-differences analysis exploiting a regulatory shock—China's Rule 18 anti-corruption regulation—that forced politically connected directors to resign confirms the link between political ties and biased reporting. Around corporate scandals, politically connected firms face softer media scrutiny, weakening reputational penalties. Critically, we show that this media shielding effect increases the likelihood of repeated regulatory violations. These findings highlight the social costs of the “scandal-covering” role of political connections, which not only distort the information environment but also undermine regulatory deterrence and market discipline. Keywords: China; Local media bias; Political connections; Social cost (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:94:y:2025:i:c:s0929119925001038 DOI: 10.1016/j.jcorpfin.2025.102835 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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