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Alternative corporate governance: Domestic media coverage of mergers and acquisitions in China

Paul Borochin and Wei Hua Cu

Journal of Banking & Finance, 2018, vol. 87, issue C, 1-25

Abstract: A text analysis of domestic Chinese newspaper articles covering 797 proposed domestic mergers shows that the media in developing countries is susceptible to pressure: coverage is more favorable for deals consistent with government objectives and involving powerful local firms. However, we also find that coverage can affect the outcome of proposed M&A deals in non-stateowned firms. We identify this effect using an exogenous shock to market-driven governance from the Split-Share Structure Reform of 2007. Negotiation coverage predicts long-term performance, consistent with information dissemination. Despite biased coverage, domestic media in developing countries can function as an alternative channel for corporate governance.

Keywords: Mergers and acquisitions; Media bias; Text categorization; Corporate governance; China (search for similar items in EconPapers)
JEL-codes: G34 G14 O16 (search for similar items in EconPapers)
Date: 2018
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