Newspaper Censorship in China: Evidence from Tunneling Scandals
63 Pages Posted: 13 Jan 2017 Last revised: 4 May 2020
Date Written: May 3, 2020
Media dissemination has an important function in facilitating price discovery. Political pressure that restricts media dissemination can hinder this function and affect investors’ perceptions. We investigate the magnitude and economic consequences of China’s newspaper censorship, which blocks further dissemination of firm-disclosed information, using a setting of “tunneling” scandals. We show significant evidence of censorship of tunneling-related negative news at both the national and the local levels. We further find that censorship leads to delays in the dissemination of tunneling news and that the news that survives censorship potentially targets less serious issues, which hinders the media’s dissemination function and delays incorporation of information into prices.
Keywords: Censorship, Media, Newspapers, China, Social and Economic Incentives, Local Protection, Information Environment, Market Reactions
JEL Classification: D83, F23, G30, G34, J50, M10, M16, M41, M48, N25, N45, O53
Suggested Citation: Suggested Citation