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Social Media and Corruption

Ruben Enikolopov, Maria Petrova and Konstantin Sonin ()

No 11263, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: There is ample evidence that in democratic countries traditional mass media affect people’s behavior and foster political and corporate accountability. Do new media such as blogs play a similar role in non-democratic countries, where offline media are often suppressed? We study consequences of blog posts about corruption in Russian state-controlled companies. We show that anti-corruption blog posts by Aleksei Navalny, a popular Russian civic activist, had a negative causal impact on market returns of state-controlled companies. For identification, we exploit the analysis of the precise timing of blog posts combined with quasi-random variation in access to blog platform caused by hacker attacks. The effect becomes less pronounced and even positive for the posts that attract the most attention, consistent with disciplining effect of social media. Furthermore, the posts have a long-term impact on returns and are associated with higher management turnover and less minority shareholder conflicts. Taken together, our results suggest that social media can discipline corruption even in a country with limited political competition and heavily censored mass media.

Keywords: financial markets; governance; political economy; social media (search for similar items in EconPapers)
JEL-codes: L82 L86 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis, nep-cul, nep-pr~, nep-pol and nep-tra
Date: 2016-05
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