Do Political Blogs Matter? Corruption in State-Controlled Companies, Blog Postings, and DDoS Attacks
AbstractThough new media has become a popular source of information, it is less clear whether or not they have a real impact on economic activity. In authoritarian regimes, where the traditional media are not free, this impact might be especially pronounced. We study consequences of blog postings of a popular Russian anti-corruption blogger and shareholder activist Alexei Navalny on the stock prices of state-controlled companies. In an event-study analysis, we find a negative effect of company-related blog postings on both daily abnormal returns and within-day 5-minute returns. To cope with identification problem, we use the incidence of distributed denial-of-services (DDoS) attacks as a variable that negatively affects blog postings, but is orthogonal to other determinants of asset prices. There is a substantial positive effect of the DDoS attacks on abnormal returns of the companies Navalny wrote about, and this effect is increasing in amount of his attention to these companies. the effect is decreasing in attention to posts of other top bloggers, increasing in visitors’ attention to Navalny’s posts, and is consistent with more pronounced individual, in contrast to institutional, trading. Finally, there are long-term effects of certain types of posts on stock returns, trading volume, and volatility. Overall, our evidence implies that blog postings about corruption in state-controlled companies have a negative causal impact on stock performance of these companies.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9169.
Date of creation: Oct 2012
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Find related papers by JEL classification:
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-20 (All new papers)
- NEP-CIS-2012-10-20 (Confederation of Independent States)
- NEP-POL-2012-10-20 (Positive Political Economics)
- NEP-TRA-2012-10-20 (Transition Economics)
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- Alexeev, Michael & Weber, Shlomo (ed.), 2013. "The Oxford Handbook of the Russian Economy," OUP Catalogue, Oxford University Press, number 9780199759927.
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