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

Abstract

We examine the influence of media attention on regulatory efficiency of corporate violations in 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 shorter duration of the violation being investigated and enforced. The effect is not diminished by the political connections of the fraudulent firms and is robust to accounting for potential confounding factors. We interpret our findings to suggest that by playing both an informational intermediary role and a pressure-exerting role in influencing regulatory efficiency, the media can serve as an effective governance mechanism even in markets with strict media control.