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Do ADS Influence Editors? Advertising and Bias in the Financial Media

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Author Info
Jonathan Reuter
Eric Zitzewitz

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Abstract

The independence of editorial content from advertisers' influence is a cornerstone of journalistic ethics. We test whether this independence is observed in practice. We find that mutual fund recommendations are correlated with past advertising in three personal finance publications but not in two national newspapers. Our tests control for numerous fund characteristics, total advertising expenditures, and past mentions. While positive mentions significantly increase fund inflows, they do not successfully predict returns. Future returns are similar for the funds we predict would have been mentioned in the absence of bias, suggesting that the cost of advertising bias to readers is small. Copyright (c) President and Fellows of Harvard College and the Massachusetts Institute of Technology..

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File URL: http://www.mitpressjournals.org/doi/pdfplus/10.1162/qjec.2006.121.1.197
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Publisher Info
Article provided by MIT Press in its journal The Quarterly Journal of Economics.

Volume (Year): 121 (2006)
Issue (Month): 1 (02)
Pages: 197-227
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Handle: RePEc:tpr:qjecon:v:121:y:2006:i:1:p:197-227

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  5. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  6. Lisa George & Joel Waldfogel, 2003. "Who Affects Whom in Daily Newspaper Markets?," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 765-784, August. [Downloadable!] (restricted)
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  8. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September. [Downloadable!]
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  22. repec:fth:prinin:455 is not listed on IDEAS
  23. Eric Zitzewitz, 2006. "Nationalism in Winter Sports Judging and Its Lessons for Organizational Decision Making," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 15(1), pages 67-99, 03. [Downloadable!] (restricted)
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  26. Jonathan B. Berk & Richard C. Green, 2002. "Mutual Fund Flows and Performance in Rational Markets," NBER Working Papers 9275, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matthew Ellman & Fabrizio Germano, 2004. "What Do the Papers Sell?," Economics Working Papers 800, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2006. [Downloadable!]
  2. Ulrike Malmendier & Geoffrey Tate, 2008. "Superstar CEOs," NBER Working Papers 14140, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Cronqvist, Henrik, 2006. "Advertising and Portfolio Choice," Working Paper Series 2006-16, Ohio State University, Charles A. Dice Center for Research in Financial Economics. [Downloadable!]
  4. Sendhil Mullainathan & Joshua Schwartzstein & Andrei Shleifer, 2006. "Coarse Thinking and Persuasion," NBER Working Papers 12720, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Sendhil Mullainathan & Andrei Shleifer, 2005. "Persuasion in Finance," NBER Working Papers 11838, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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