Common Business Group Affiliation, Media Reporting, and Firms’ Information Environment

We examine whether connections through common business group affiliation affect media reporting on firms and whether firms experience any real effects consequently. We find that firms receive more positive coverage from connected newspapers. This result is robust to a DiD design and controlling for newspaper-firm pair fixed effects, and is stronger when business groups have more incentive and power to influence the newspapers and when firms need more positive media coverage. We further show that these firm-media connections undermine the newspaper’s information intermediary role, which affects firms’ information environment, costs of capital, and intensity of related party transactions.