Does media coverage help firms “lobby” for government subsidies? Evidence from China

Jin-hui Luo (), Zeyue Huang () and Ruichao Zhu ()
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Jin-hui Luo: Xiamen University
Zeyue Huang: Xiamen University
Ruichao Zhu: The Hong Kong University of Science and Technology

Asia Pacific Journal of Management, 2021, vol. 38, issue 1, No 11, 259-290

Abstract: Abstract This study draws on the resource dependence theory to investigate the effect of media coverage on local governments’ subsidizing behavior. Using a sample of Chinese A-share listed firms spanning 2007–2012, we find that media coverage significantly increases both the likelihood and the amount of focal firms’ subsidies received from local governments. The positive relationship is found to be more pronounced for firms under special treatment (ST) status and for private firms. Further, we find that both positive and negative media coverage are positively associated with focus firms’ government subsidy receiving. Overall, our findings indicate that media coverage plays a “lobbying” role in helping firms particularly those vulnerable firms acquire subsidies from local governments. This study contributes to the resource dependence theory by suggesting that local governments are subject to public opinion evoked by media coverage, and also enriches the literature regarding the role of media coverage.

Keywords: China; Government subsidies; Media coverage; Private firms; Resource dependence theory; Special treatment (ST) (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10490-018-9600-1

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