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Does media coverage help firms “lobby” for government subsidies? Evidence from China

  • Jin-hui LuoEmail author
  • Zeyue Huang
  • Ruichao Zhu
Article
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Abstract

This study draws on the resource dependence theory to investigate the effect of media coverage on local governments’ subsidizing behavior. Using a sample of Chinese A-share listed firms spanning 2007–2012, we find that media coverage significantly increases both the likelihood and the amount of focal firms’ subsidies received from local governments. The positive relationship is found to be more pronounced for firms under special treatment (ST) status and for private firms. Further, we find that both positive and negative media coverage are positively associated with focus firms’ government subsidy receiving. Overall, our findings indicate that media coverage plays a “lobbying” role in helping firms particularly those vulnerable firms acquire subsidies from local governments. This study contributes to the resource dependence theory by suggesting that local governments are subject to public opinion evoked by media coverage, and also enriches the literature regarding the role of media coverage.

Keywords

China Government subsidies Media coverage Private firms Resource dependence theory Special treatment (ST) 

Notes

Acknowledgements

We acknowledge financial support from the National Natural Science Foundation of China (Grant No. 71572160). We greatly thank for valuable comments and suggestions from the Senior Editor Prof. Kevin Zheng Zhou and two anonymous reviewers. All remaining errors are our own.

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Authors and Affiliations

  1. 1.School of ManagementXiamen UniversityXiamenPeople’s Republic of China
  2. 2.HKUST Business SchoolThe Hong Kong University of Science and TechnologyKowloonHong Kong

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