Media Capture in China (with David Strömberg and Yanhui Wu)

Abstract: This study investigates whether business entities influence newspapers through advertisements. Leveraging the endogeneity between the timing of corporate misconducts and the timing of the local political turnover , we identify a significant increase in advertisement value in newspapers for firms involved in these corporate misconducts compared to those not involved. Further analysis reveals that state-owned enterprises and firms operating in highly regulated industries engage in stronger media capture. Additionally, commercial-oriented newspapers and newspapers operating in more competitive local market are more susceptible to this influence. These findings suggest that business capture on newspaper advertisements works as a substitution of political capture.