Word Power: The Impact of Negative Media Coverage on Disciplining Corporate Pollution

• DOI: 10.1007/s10551-015-2596-2
• Publication Date: 2015-03-23T15:58:23Z
• Authors: Ming Jia; Li Tong; P. V. Viswanath; Zhe Zhang
• Keywords: Geographic location; Business and Corporate Communications; 13. Climate action; Word count; 0502 economics and business; 05 social sciences; Business Law; and Ethics; Negative reports; Corporate pollution; Public Responsibility

Sequences of individual words make up media reports. And sequences of media reports constitute the power of the news media to influence corporate practices. In this paper, we focus on the micro-foundations of news reports to elaborate how an atmosphere of negative news reports following an initial exposure of corporate pollution activity can help stop such activity through their impact on corporate managers. We extend our understanding of the corporate governance effect of news media by considering two new aspects of reports—one, the proportion of words in negative reports relative to the total number of words in all reports; and two, the geographical origin of news media. We suggest that the more negative the media coverage, and the more local this coverage, the greater the impact on corporations. Our study of news media reports from more than 600 newspaper sources on disciplining pollution activities of listed Chinese firms from 2004 to 2012 provides strong support for our hypotheses. These findings have valuable implications for the handling of pollution issues in transitional economies via the power of news words.