The Corporate Governance Role of the Media: Evidence from Russia

79 Pages Posted: 17 Mar 2006

See all articles by I. J. Alexander Dyck

I. J. Alexander Dyck

University of Toronto - Rotman School of Management

Natalya Volchkova

New Economic School (NES); Center for Economic and Financial Research (CEFIR)

Luigi Zingales

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2006

Abstract

We study the effect of media coverage on corporate governance by focusing on Russia in the period 1999-2002. This setting offers us three ideal conditions for such a study: plenty of corporate governance violations, no alternative mechanisms to address them, and the presence of an investment fund (the Hermitage) that actively lobbies the international press to shame companies perpetrating those violations. We find that Hermitage's lobbying is effective in increasing the coverage of corporate governance violations in the Anglo-American press. We also find that coverage in the Anglo-American press increases the probability that a corporate governance violation is reversed. This effect is present even when we instrument coverage with an exogenous determinant, i.e. the Hermitage's portfolio composition at the beginning of the period. The Hermitage's strategy seems to work in part by impacting Russian companies' reputation abroad and in part by forcing regulators into action.

Keywords: Corporate Governance, international media, investment, Russia

JEL Classification: G30, A10, J10, Z10

Suggested Citation

Dyck, I.J. Alexander and Volchkova, Natalya and Zingales, Luigi, The Corporate Governance Role of the Media: Evidence from Russia (June 2006). ECGI - Finance Working Paper No. 154/2007, Available at SSRN: https://ssrn.com/abstract=891206 or http://dx.doi.org/10.2139/ssrn.891206

I.J. Alexander Dyck

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S 3E6
Canada
416-946-0819 (Phone)

Natalya Volchkova

New Economic School (NES)

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Center for Economic and Financial Research (CEFIR) ( email )

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117418 Moscow
Russia
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Luigi Zingales (Contact Author)

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

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1000 Brussels
Belgium

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