Finance Webinar（2020-12)

Topic: Common Business Group Affiliation and Media Slant

Speaker: Fei Xie, University of Delaware & ECGI

Time: Wednesday, 24 June, 10:00-11:30am Beijing Time

Location: Microsoft Teams Online conference room

Abstract:

Using a novel dataset that allows the identification of newspapers and publicly traded firms affiliated with the same business group via equity ownership, we examine whether common business group affiliation affects the quality of media reporting on firms. We find that newspapers are more optimistic in their coverage of connected firms and that there is a weaker association between their reporting and the stock returns that firms experience. Further analyses reveal that the optimism bias is stronger when the affiliated business group has more investment at stake in the publicly traded firm and more power to influence the newspaper and when the firm can benefit more from positive media coverage. Finally, we show that connected newspapers play a weaker information intermediary role, as their reporting tone has less predictive power for future firm performance and adverse corporate events and firms with connected newspapers exhibit higher stock return synchronicity. Overall, our evidence suggests that media-firm connections via common business group affiliation undermines the media’s independence and objectivity.

Introduction:

Dr. Xie is Professor of Finance and Iannaccone Faculty Fellow at the University of Delaware, and a Research Associate at the European Corporate Governance Institute (ECGI).His research interests are primarily in empirical corporate finance with an emphasis on corporate governance. Within this general field, his work spans the following areas: Takeover Defenses, Board of Directors, Dual-class Shares, Mergers and Acquisitions, Executive Compensation, Institutional Investors, Sell-side Analysts, Social Trust, Corporate Innovation, Corporate Disclosure, Securities Issuance, and Venture Capital.

Dr. Xie has published in a wide range of top academic journals including the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Accounting and Economics, The Accounting Review, Journal of Financial and Quantitative Analysis, and Contemporary Accounting Research. His research has received several awards and garnered significant citations.

Your participation is warmly welcomed!