Media Attention and Regulatory Efficiency of Corporate Violations: Evidence from China

Abstract

We examine the influence of media attention on the regulatory efficiency of corporate violations in a restrictive media environment. Using a hand-collected sample of corporate violations in China during 1998-2018, we find that fraudulent firms accompanied by more negative media attention are associated with a higher hazard rate of the violation being investigated and enforced. The effect is not diminished by the political connections of the fraudulent firms and is robust after controlling for potential confounding factors. Our findings suggest that by influencing regulatory efficiency, the media serve as an effective governance mechanism even in markets with strict media control.

Keywords: Media Attention, Regulatory Efficiency, and Corporate Violations

JEL Classification: G31, G32, G34