Reputation and news suppression in the media industry

Ascension Andina-Diaz and José A. García-Martínez ()
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José A. García-Martínez: Department of Economics and Finance, University Miguel Hernández

No 2018-10, Working Papers from Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center

Abstract: This paper proposes a new argument to explain why media firms silence information that may be relevant to consumers and why this behavior varies across firms. We build on the literature of career concerns and consider firms that seek to maximize their reputation for high quality. Crucial to our results is the idea that media firms can affect, with their reporting strategy, the probability that consumers learn the true state. Reputational concerns dictate that a monopoly firm suppresses scoops, even when evidence is strong. With competition, precise private information is published but weaker though informative signals are silenced. We obtain that silence is higher in media firms with high levels of initial reputation and/or great social influence. We draw predictions on a firm's optimal choice of an editorial standard, the persistence of news suppression when consumers believe one state to be more likely than another and the possibility that silence may be socially beneficial.

Keywords: Reputation; news suppression; feedback power; competition; editorial standars; herding; efficiency (search for similar items in EconPapers)
JEL-codes: C72 D82 D83 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2018-12
New Economics Papers: this item is included in nep-com, nep-cul and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Reputation and news suppression in the media industry (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:mal:wpaper:2018-10

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