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Does Conflict of Interest Lead to Biased Coverage? Evidence from Movie Reviews

Stefano DellaVigna () and Johannes Hermle

No 20661, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Media outlets are increasingly owned by conglomerates, inducing a conflict of interest: a media outlet can bias its coverage to benefit companies in the same group. We test for bias by examining movie reviews by media outlets owned by News Corp.—such as the Wall Street Journal—and by Time Warner— such as Time. We use a matching procedure based on reported preferences to disentangle bias due to conflict of interest from correlated tastes. We find no evidence of bias in the reviews for 20th Century Fox movies in the News Corp. outlets, nor for the reviews of Warner Bros. movies in the Time Warner outlets. We can reject even small effects, such as biasing the review by one extra star (out of four) every 13 movies. We test for differential bias when the return to bias is plausibly higher, examine bias by media outlet and by journalist, as well as editorial bias. We also consider bias by omission: whether the media at conflict of interest are more likely to review highly-rated movies by affiliated studios. In none of these dimensions do we find systematic evidence of bias. Lastly, we document that conflict of interest within a movie aggregator does not lead to bias either. We conclude that media reputation in this competitive industry acts as a powerful disciplining force.

JEL-codes: D72 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cul and nep-ind
Date: 2014-11
Note: CF IO LE LS PE POL
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Published as Stefano Dellavigna & Johannes Hermle, 2017. "Does Conflict of Interest Lead to Biased Coverage? Evidence from Movie Reviews," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1510-1550.

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