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Does media spotlight really burn innovation? Evidence from China

Author

Listed:
  • Hu, Guoqiang
  • Luo, Jin-hui
  • Han, Liang
  • Liu, Tianbao

Abstract

This study investigates whether and how media coverage influences corporate innovation in China as an emerging economy. In sharp contrast to evidence from developed markets (e.g., U.S.), this study demonstrates that media coverage is positively associated with corporate innovation in China. The results hold following a series of endogeneity and robustness tests. We also demonstrate that media coverage largely has a positive influence through improving the information environment and external governance and alleviating financial constraints for innovative firms. Furthermore, the effects of media coverage are more pronounced for firms located in less developed regions of China. Finally, we find that the effects of media coverage are driven by nonofficial rather than official media coverage, and positive (negative) coverage facilitates (impedes) corporate innovation. Overall, this study contributes to the literature by confirming that media coverage may spur rather than burn corporate innovation in emerging markets.

Suggested Citation

  • Hu, Guoqiang & Luo, Jin-hui & Han, Liang & Liu, Tianbao, 2024. "Does media spotlight really burn innovation? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:pacfin:v:83:y:2024:i:c:s0927538x23003116
    DOI: 10.1016/j.pacfin.2023.102240
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    More about this item

    Keywords

    Media coverage; Corporate innovation; Information intermediary; Corporate governance; Financial constraint; China;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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