Does Social Media Identify the Optimistic Bias of State-Controlled Media? Evidence from China

Yakun Wang, T. J. Wong and Tianyu Zhang

Journal of Law and Economics, 2026, vol. 69, issue 3, 693 - 731

Abstract: State-controlled media, which is subject to political influence, tends to exhibit optimistic bias. In contrast, anonymous forms of social media, which rely on the collective wisdom of crowds and aggregate opinions, are less likely to reflect politically induced optimistic bias. This paper investigates whether social media can serve as a benchmark for identifying the optimistic bias of state-controlled media. Using articles from state-controlled newspapers and anonymous posts from online stock forums in China that discuss the same firms on the same days from 2009 to 2016, we find that social media can effectively identify the politically induced positively biased tone in state-controlled media. Furthermore, our stock return analysis shows that the market perceives state-controlled media as less informative when it is identified as optimistically biased, which provides additional evidence that social media can serve as a reliable benchmark for detecting reporting bias.

Date: 2026
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