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Alternative corporate governance: Domestic media coverage of mergers and acquisitions in China

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  • Borochin, Paul
  • Cu, Wei Hua

Abstract

A text analysis of domestic Chinese newspaper articles covering 797 proposed domestic mergers shows that the media in developing countries is susceptible to pressure: coverage is more favorable for deals consistent with government objectives and involving powerful local firms. However, we also find that coverage can affect the outcome of proposed M&A deals in non-stateowned firms. We identify this effect using an exogenous shock to market-driven governance from the Split-Share Structure Reform of 2007. Negotiation coverage predicts long-term performance, consistent with information dissemination. Despite biased coverage, domestic media in developing countries can function as an alternative channel for corporate governance.

Suggested Citation

  • Borochin, Paul & Cu, Wei Hua, 2018. "Alternative corporate governance: Domestic media coverage of mergers and acquisitions in China," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 1-25.
  • Handle: RePEc:eee:jbfina:v:87:y:2018:i:c:p:1-25
    DOI: 10.1016/j.jbankfin.2017.08.020
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    Cited by:

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    2. Faff, Robert & Prasadh, Shyaam & Shams, Syed, 2019. "Merger and acquisition research in the Asia-Pacific region: A review of the evidence and future directions," Research in International Business and Finance, Elsevier, vol. 50(C), pages 267-278.
    3. Hu, Jun & Wu, Huiying & Ying, Sammy Xiaoyan & Long, Wenbin, 2021. "Relative-to-rival corporate philanthropy, product market competitiveness, and stakeholders," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(1).
    4. Guo, Shijun & Yu, Xin & Faff, Robert, 2021. "Political connections and media slant," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 58-80.

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    More about this item

    Keywords

    Mergers and acquisitions; Media bias; Text categorization; Corporate governance; China;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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