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

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  • Jin-hui Luo

    (Xiamen University)

  • Zeyue Huang

    (Xiamen University)

  • Ruichao Zhu

    (The Hong Kong University of Science and Technology)

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.

Suggested Citation

  • Jin-hui Luo & Zeyue Huang & Ruichao Zhu, 2021. "Does media coverage help firms “lobby” for government subsidies? Evidence from China," Asia Pacific Journal of Management, Springer, vol. 38(1), pages 259-290, March.
    • Handle: RePEc:kap:asiapa:v:38:y:2021:i:1:d:10.1007_s10490-018-9600-1
    DOI: 10.1007/s10490-018-9600-1
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